Bottom line: China’s anti-trust regulator is moving cautiously in approving the Marriott-Starwood merger because it involves 2 major global brands with a big presence in the high end of the market, but will ultimately approve the deal.
China extends anti-trust review for Marriott-Starwood merger
China is once again creating problems for an offshore M&A deal that would create the world’s largest hotel company, with word that it’s extending an anti-trust review period for the landmark merger of US hotel giants Marriott (NYSE: MAR) and Starwood (NYSE: HOT). Industry watchers got some brief entertainment earlier this year when Chinese insurer Anbang sparked a bidding war with its surprising offer for Starwood, operator of the Sheraton and Westin brands that had already agreed to be acquired by Marriott. Anbang later dropped that bid, but now more delays are coming from China, where the anti-trust regulator says it needs more time to review the deal. Read Full Post…
Bottom line: China Lodging’s revenue growth could slip into single digits by the end of the year and could start to contract in 2017, as China’s hotel industry corrects after years of strong growth.
China Lodging assists franchisees
Overbuilding and a slowing economy are taking a toll on one of China’s leading hotel operators, which has just revealed it is slashing some of the fees it charges to its franchising partners as they struggle for business. The revelations by China Lodging Group (Nasdaq: HTHT), also known as Huazhu, bode poorly for China’s broader hotel industry, which is suffering a hangover following explosive growth over the last 2 decades. Investors greeted the downbeat news by selling off China Lodging shares, which closed down 2.4 percent and have lost more than 12 percent of their value since the end of March. Read Full Post…
Bottom line: HNA’s potential bid for 2 South American airlines looks opportunistic and could succeed due to its likely willingness to overpay, while Jin Jiang’s latest attempt to boost its stake in Accor could presage a takeover bid this year or next.
HNA eyes South American airlines
Two major tourism deals are in the headlines as the new week begins, reflecting Chinese companies’ desire to capitalize on the growing number of local tourists traveling abroad. Leading the news is word that Hainan Airlines (Shanghai: 600221) parent HNA Group is in talks to purchase South American carrier Avianca, just a week after the company made another major investment in Australian carrier Virgin Australia (Sydney: VBA). (previous post) The other headline has hotel company Jin Jiang (HKEx: 2006; Shanghai: 600754) trying to slowly take control of French giant Accor (Paris: AC), with word it wants to further boost a stake that it started buying early this year. Read Full Post…
Bottom line: Major new hotel acquisitions by HNA Group and Jin Jiang reflect a recent wave of domestic consolidation and global hotel buying by Chinese companies, and could culminate with a Jin Jiang bid for France’s Accor.
Jin Jiang buys Vienna Hotels
Two of China’s biggest acquirers from the travel sector are in the headlines today, both with very European-sounding investments. The larger of those will see HNA Group, parent of Hainan Airlines (Shanghai: 600221), purchase the Belgium-based owner of the Radisson hotel brand. The other will see Shanghai-based hotel operator Jin Jiang (HKEx: 2006; Shanghai: 600754) buy 80 percent of Vienna Hotels Group, a European-sounding name that is actually just a Chinese operator based in the southern boomtown of Shenzhen.
Both deals reflect a recent Chinese appetite for global hotel companies, including property owners and management firms. That appetite was on prominent display last month, when insurance company Anbang got in a heated bidding war for US-based Starwood (NYSE: HOT), owner of the Sheraton and Westin brands. Anbang bid aggressively against US operator Marriott (NYSE: MAR) in that battle, but ultimately bowed out under pressure from China’s insurance regulator. (previous post) Read Full Post…
Bottom line: China Lodging looks like a good long-term bet to become a leading Chinese hotel operator, drawing on an alliance with France’s Accor in its ongoing transformation to become a manager and franchisor of major brands.
China Lodging transforms
Chinese insurer Anbang is making headlines this week with its surprise and intense bid for US hotel giant Starwood (NYSE: HOT), but an equally exciting hospitality story is happening behind the scenes with the quieter transformation of homegrown hotelier China Lodging (Nasdaq: HTHT). The US-listed hotel operator rose to early prominence with its chain of low-cost Hanting hotels, which have become a mainstay for China’s growing legions of budget-conscious travelers.
But more recently the company, also known as Huazhu, has signed a major tie-up with French hotel giant Accor (Paris: AC), owner of the better-known Sofitel and Ibis brands. That move, a first-of-its-kind for a homegrown Chinese hotel brand, should help China Lodging improve its operations and give it a potential entree onto the global stage. Read Full Post…
Bottom line: Anbang Insurance is paying a big premium for US luxury hotels and may have to sell them for losses when China’s property market corrects, while China Lodging looks like a good bet due to growing profits from its focus on hotel franchising and management.
China Lodging posts big profit growth
A couple of hotel stories are in the headlines as we head into the new week, led by a surprise blockbuster deal that will see Chinese insurer Anbang buy US-based Strategic Hotels & Resorts for $6.5 billion. Meantime, one of China’s largest private hotel operators, China Lodging (Nasdaq: HTHT), has just reported its latest quarterly results that showed a big jump in profitability, as it mimics western peers by focusing on franchising and management services rather than self-developing properties.
These 2 stories both involve hotels but are also quite different, since Anbang’s move is squarely focused on overseas markets and its purchase represents an investment in property ownership. By comparison, China Lodging, owner of the budget Hanting hotel chain, is a domestic story of a company trying to move away from property ownership and into the higher end businesses of hotel management and franchising services. Read Full Post…
The following press releases and news reports about China companies were carried on March 12-14. To view a full article or story, click on the link next to the headline.
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Huawei Enterprise Unit Achieves Profitability in 2015 (Chinese article)
Canadian Solar (Nasdaq: CSIQ) Reports Q4 and Full Year Results (PRNewswire)
Alibaba’s (NYSE: BABA) Cainiao Logistics Arm Targets Colleges (English article)
Huayi (Shenzhen: 300027), Tencent (HKEx: 700) Prepare Vehicle for Hollywood, Korea Deals (English article)
Ant Financial’s Sesame Credit Starts Beta Testing of Enterprise Credit Service (English article)
Bottom line: Hard Rock’s new plan for China resorts and restaurants will do well due to its focus on young, wealthy hipsters, and could also auger a broader move by second-tier global hotel brands into the market.
Hard Rock coming to China
China’s hotel sector has just crossed a sort of milestone, with word that Hard Rock, a well-known but decidedly second-tier western brand, is dipping its toe into the market. Hard Rock’s move comes more than a decade after most of the world’s top hotel operators entered China, and roughly coincides with a recent push by global names like Marriott (NYSE: MAR) and Accor (Paris: AC) into the middle- and lower ends of the market.
Hard Rock has announced plans to build 3 hotel resorts in the cities of Dalian, Shenzhen and Haikou, and additional plans to open Hard Rock restaurants that are more familiar to many consumers. (English article) Such a plan looks a bit late, but could actually be well-timed since most of these resorts won’t be complete for a few years after the market has absorbed a recent glut in new property building. Read Full Post…
Bottom line: Jin Jiang’s pursuit of Shenzhen-based Vienna Hotel Group, combined with other recent M&A, could vault it to China’s leading hotel operator, though its sudden rapid expansion looks at least partly politically motivated.
Jin Jiang aims high with Vienna Hotel talks
Shanghai-based hotel operator Jin Jiang’s (HKEx: 2006; Shanghai: 600754) recent appetite for M&A continues to grow, with word that the company is in talks to buy a Shenzhen-based rival in a deal that would boost its hotel count by a third. A successful purchase of the privately held Vienna Hotel Group would mark the latest mega-purchase by Jin Jiang, which has suddenly emerged as China’s hot hotel company to watch.
Jin Jiang is certainly a household name in my adopted hometown of Shanghai, and this latest deal, when combined with others, would move the company into the ranks of one of China’s top 5 operators and the only one with a global presence. There’s only one problem with all of this, namely that Jin Jiang is one of the only top players that’s a state-run company. That contrasts sharply with other leading names like Homeinns (NYSE: HMIN), China Lodging (Nasdaq: HTHT) and Plateno, that are all privately owned. Read Full Post…
Bottom line: HNA’s purchase of a stake in a small US hotel chain could presage a larger buyout bid for the company in partnership with a Chinese operator looking to expand abroad.
HNA checks in to Red Lion
We’ll take a break today from all the recent mega-deals involving Chinese firms, and focus our attention on a much smaller hotel purchase by private equity high flyer HNA Group. Frankly speaking, I find this new investment in US hotelier Red Lion Hotels (NYSE: RLH) a bit puzzling, as the actual size of the deal is very small and hardly worthwhile for a leading Chinese private equity investor like HNA. But that said, global real estate and hotels in particular have emerged as a hot commodity for big Chinese investors over the last year, meaning this particular deal could presage a larger purchase in the sector by HNA as it tests out the market. Read Full Post…
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…
