When we wrapped up King of Capital a year ago, Blackstone’s massive, $5.5 billion investment in a $29 billion buyout of the Hilton hotel chain looked like it could be a dog. The company was in no danger of going under, but the deal was signed at the very peak of the market in July 2007 and travel dropped off sharply in the recession. That looked like a recipe for a bad investment.

But no sooner had Blackstone talked Hilton’s bankers into reducing its debt and the company began a nearly miraculous turnaround, as David recounts in a recent feature in The Deal. Blackstone could easily double its money if the company stays on course.

Another large bet on the travel industry, isn’t doing so well for Blackstone, however. We cited Travelport, a back-end reservations system for airlines and travel portals such as its subsidiary Orbitz, as an example of a case where private equity ownership allowed a major restructuring that dramatically improved the company. A year ago, it looked like that would pay off on the bottom line. But now Travelport is plagued by problems, including a sluggish airline industry, mergers among major airline customers (Delta + Northwestern, then United + Continental) and an antitrust suit filed against it by American Airlines.

Travelport, which is leveraged to the hilt, has seen its cash flow fall and, this week, its debt rating was cut, as David explains in another story in The Deal.

We stick by our conclusion that Blackstone’s ownership was good for the company and, if Blackstone had exited in an IPO last year, as it hoped, it might have been a winner. Blackstone recouped almost all of its investment via a dividend in 2007, so it likely won’t lose money on the deal. But, based on Travelport’s current financial results and the valuation of Amadeus, a publicly traded competitor, Blackstone’s investment at the moment is worth nothing on paper. Plainly, things will have to improve if Blackstone is going to do more than just break even.