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TRAVEL: China Lodging, Tongcheng in Domestic Travel Buys

By newsdoug on December 28, 2015

Bottom line: New acquisitions by China Lodging and Tongcheng reflect consolidation in China’s travel industry, which is likely to accelerate in 2016 as the nation’s economy slows.

Two smaller acquisitions from the travel realm are in the headlines as we close out 2015, with China Lodging (Nasdaq: HTHT) and Tongcheng both buying domestic companies. The first deal will see China Lodging, operator of the HanTing budget hotel chain, purchase a smaller operator called Hotel Home. The other comes in the related travel services space, and has Tongcheng buying a smaller rival called Shanghai MCTS.

Neither of these deals looks extremely exciting as both are quite small, but both do reflect a recent wave of consolidation that is sweeping China’s fragmented travel industry. Industry veteran Ctrip (Nasdaq: CTRP) is emerging as the clear leader and top consolidator in the travel services space. The hotel space is a bit less clear, with China Lodging, Homeinns (Nasdaq: HMIN) and Jin Jiang (HKEx: 2006; Shanghai: 600574) all jockeying for position in that space. Read Full Post…

TRAVEL: 7 Days, Hampton Operator Finds Room at Jin Jiang Lodge

By newsdoug on July 13, 2015

Bottom line: Jin Jiang’s purchase of a large Chinese hotel operator reflects its ambitions to become a leading player in China’s slowing market, though it could be undermined by its roots as a state-run company.

We’re finally seeing some big consolidation start to happen in China’s crowded hotel industry, with reports that Shanghai-based operator Jin Jiang (HKEx: 2006; Shanghai: 600754) is near a deal to buy the parent of formerly New York-listed 7 Days. The move comes just 7 months after Jin Jiang made another major purchase in Europe, and signals the company is clearly becoming a player to watch in China’s lodging space.

China’s hotel industry is undergoing some major changes right now, as the market suffers from oversupply created during a major build-up in the first decade of the 21st century. Leading player Homeinns (Nasdaq: HMIN) is in the process of privatizing after its stock languished on Wall Street due to lackluster growth prospects. China Lodging Group (Nasdaq: HTHT), operator of the Hanting chain, also made a major move late last year when it announced a major tie-up with French hotel giant Accor (Paris: AC). (previous post) Read Full Post…

TRAVEL: Homeinns Chases Mid-Market Hotels With New Brands

By newsdoug on April 10, 2015

Bottom line: A new push into mid-range hotels could provide a boost for Homeinns and other operators, but the relief is likely to be short lived as that part of the market also quickly becomes saturated.

Home Inns goes upscale with new brands

Hotel operators are rushing to fill a relative void in the middle of China’s market, with word that leading budget chain Homeinns (Nasdaq: HMIN) has launched new brands aimed at consumers willing to spend a bit more during their travels. The move looks relatively smart, as growth slows at the top and bottom ends of the market due to overbuilding and a slowing economy that is putting a damper on domestic travel. But Homeinns isn’t the only one to notice this void, and recent similar moves by others could see this middle part of the market also quickly become saturated and oversupplied. Read Full Post…

TRAVEL: Accor Checks Into China Lodging With New Alliance

By newsdoug on December 15, 2014

Bottom line: Accor’s new tie-up with China Lodging looks like a smart deal that will bring together complementary partners, and is likely to spark a new round of similar cross-border partnerships in the year ahead.

China Lodging moves in with Accor

A development I’ve been predicting for quite a while has finally happened in China’s lucrative but crowded hotel space, with news of a major new tie-up between global giant Accor (Paris: AC) and domestic budget operator China Lodging Group (Nasdaq: HTHT), which also calls itself Huazhu. The tie-up will essentially see China Lodging take over operation of much of Accor’s China portfolio, and could ultimately see Accor purchase the Chinese company outright. The move could also spark a round of similar tie-ups that sees other major foreign operators pair up with Chinese partners like Home Inns (Nasdaq: HMIN). Read Full Post…

TRAVEL – Jin Jiang Calls On Europe With Louvre Buy

By newsdoug on November 14, 2014

Bottom line: Jin Jiang is emerging as China’s first global hotel brand, but its inexperience and focus on property ownership with its first major acquisition are likely to produce poor results for the campaign.

Domestic hotel stalwart Jin Jiang (Shanghai: 600754; HKEx: 2006) is quickly emerging as China’s hotel company to watch on the global stage, with word that it’s on the verge of a deal to buy Louvre Hotels Group, Europe’s second largest operator. The acquisition would be the biggest so far for Jin Jiang, which is China’s only hotel operator to make any serious moves outside its home market. Frankly speaking, I’m a bit surprised that state-owned Jin Jiang is leading this particular global expansion campaign, since I would have expected one of the country’s private hotel operators to be at the forefront of this initiative. Read Full Post…

Hilton, Wanda In New China Budget Plays

By newsdoug on October 31, 2014

There’s a bit of buzz in the travel space today, with word of major new initiatives in the hotel and airline sectors for global hotelier Hilton Worldwide (NYSE: HLT) and domestic real estate titan Wanda Group. The former will see Hilton roll out the welcome mat for one of its main low-cost brands in China, taking aim at names like Home Inns (Nasdaq: HMIN) and China Lodging Group (Nasdaq: HTHT). The latter move has Wanda’s talkative founder Wang Jianlin discussing a potential new airline launch, as his company also makes a big push into the travel and leisure sector. Read Full Post…

Jinjiang Takes Baby Step Into Global Lodge

By newsdoug on January 17, 2014

Jin Jiang tries Indonesia

I have to admit I was a bit surprised to read a report that Jin Jiang (HKEx: 2006； Shanghai: 600754) has become the first of China’s hotel operators to expand on the global stage, with word that the Shanghai-based chain has signed a deal to enter Indonesia. I really expected one of the US-listed Chinese hotel companies like Home Inns (Nasdaq: HMIN) or China Lodging Group (Nasdaq: HTHT) to make that move first, since those companies are more entrepreneurial than the stodgier state-run Jin Jiang. But that said, this small move by Jin Jiang looks like a prudent way to test out international markets as it looks for global growth opportunities. Read Full Post…

Carlyle, Home Inns Drive Hotel Consolidation 酒店业整合加速：如家快捷和凯雷投资的并购

By newsdoug on July 6, 2012

Consolidation is accelerating the budget hotel space with new acquisitions by industry leader Home Inns (Nasdaq: HMIN) and private equity giant Carlyle (Nasdaq: CG), as China’s top operators look for ways to maintain their growth going amid a slowing market. This growing string of smaller deals is building up to the big story that’s likely to come in the next 2 years, when we could see a Chinese player make a global acquisition or one of the big foreign operators buy up a Chinese brand.

Read Full Post…

Hotels: Room for Consolidation 经济型酒店行业或加速整合

By newsdoug on May 10, 2012

Hanting Hotels operator slips into the red China’s second and third biggest US-listed hotel firms, 7 Days (NYSE: SVN) and China Lodging (Nasdaq: HTHT), have just released their latest quarterly results, showing that growth has returned to the industry after a difficult 2011, but that competition remains stiff with room for more consolidation. The results are really quite a mixed bag, but both companies showed healthy revenue growth, with Seven Days’ top line up 30 percent and China Lodging, operator of the Hanting hotel chain, up an even stronger 53 percent. (7 Days announcement; China Lodging announcement) But their bottom lines both looked quite weak, with 7 Days reporting a small profit of about $3 million while China Lodging slipped into the red with a loss of about $1.5 million. In terms of outlook, both companies saw revenue growth continuing at about 30 percent, the result of aggressive expansion and growing demand from newly affluent Chinese consumers with extra money to spend on traveling. In terms of broader context, the budget hotel industry is clearly not a very profitable one, as reflected by China Lodging’s reporting of a loss and the fact that 7 Days’ profit was just 3.5 percent of total revenues. Shareholders seem to have liked the 7 Days results a bit more, bidding up the company’s shares 4 percent after it announced the figures while China Lodging’s shares were unchanged. Still, shares of both companies now trade near 52-week lows, reflecting the challenging environment for a sector that is both promising in terms of growth but also quite competitive and in need of consolidation. The sector turned in a disappointing 2011 after a boom the previous year when occupancy and room rates soared largely due to a big jump in business in Shanghai during the city’s World Expo. We started to see some consolidation after that, with industry leader Home Inns (Nasdaq: HMIN) buying smaller chain Motel 168 for about $500 million last year, and 7 Days buying another small chain called Huatian for a more modest $20 million. (previous post) But with many of the big global names like France’s Accor (Paris: AC) and Britain’s InterContinental (London: IHG) also getting into the budget space, competition is likely to remain intense. Accordingly, look for more consolidation to occur, with smaller money-losing chains the likeliest targets and even a bigger name like China Lodging potentially getting purchased over the next 2 years.

Bottom line: The latest results from 7 Days and China Lodging show a growing but highly competitive budget hotel sector, with accelerating consolidation likely in the next 2 years.