Bottom line: HNA’s $6.5 billion investment in Hilton marks a new high point in Chinese global hotel buying, and signals the trend may be cresting and a downturn could come next year.
HNA invests in Hilton
After I said just last week that China’s recent buying binge of foreign hotels may have crested, we’re seeing yet another blockbuster deal that seems to support that thesis. This latest deal is the biggest to date, and has the acquisitive HNA Group buying 25 percent of US hotel giant Hilton (NYSE: HLT) for about $6.5 billion. That would easily eclipse the other recent blockbuster deal announced just last week, when insurance giant China LIfe (HKEx: 2628; Shanghai: 601628; NYSE: LFC) said it was leading a Chinese group that would invest $2 billion in a portfolio of lower-end US hotels. (previous post) Read Full Post…
Bottom line: China Life’s $2 billion investment in a US hotel portfolio could mark the height of a bubble of Chinese offshore hotel buying, and high asset values could start to deflate by the end of next year.
China Life buys into US hotel portfolio
Move over, Anbang. China’s largest insurer China Life (HKEx: 2628; Shanghai: 601628; NYSE: LFC) is joining a recent love affair between Chinese investors and overseas hotels, with the announcement that it’s leading a group investing in $2 billion worth of properties in the US. People following the trend will know that unlisted insurer Anbang has been leading this overseas charge, with its recent purchase of a US hotel portfolio for $6.5 billion and its failed bid earlier this year for hotel operator Starwood (NYSE: HOT). Read Full Post…
Bottom line: Jin Jiang’s $260 million investment in WeWork is part of the Chinese company’s global expansion, and could see the pair work together to accelerate a move of the shared office concept into China.
Shared office specialist gets backing from Jin Jiang
After getting a chilly reception in the US and France, Chinese companies eager to buy western hotel brands may be taking a different approach in their bid to go global. That appears to be the bottom line in a new move by state-run Chinese hotel giant Jin Jiang (HKEx: 2006; Shanghai: 600754), which has reportedly just invested $260 million in US shared office space operator WeWork.
Foreign hotels have become a flavor of the day for Chinese buyers looking to expand beyond their home market and import foreign expertise to improve their own operations. In addition to brands, Chinese companies have also developed a taste for big-name foreign hotels, led by the purchase of New York’s storied Waldorf Astoria by state-owned Chinese insurer Anbang nearly 2 years ago for an eye-popping price of nearly $2 billion. 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…
The following press releases and news reports about China companies were carried on June 4-6. To view a full article or story, click on the link next to the headline.
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Accor Gains After Report That Jin Jiang (HKEx: 2006) Aims to Increase Stake (English article)
China’s HNA Group Eyes South American Airline Groups Avianca – Sources (English article)
SoftBank Proceeds From Alibaba (NYSE: BABA) Selldown Rise to $10 Bln (English article)
Huawei Aims to Pass Samsung, Apple in 5 Years to Become Top Smartphone Brand (Chinese article)
Indian Smartphone Maker Micromax Plans to Enter China Next Year (Chinese article)
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…
The following press releases and news reports about China companies were carried on April 29. To view a full article or story, click on the link next to the headline.
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Carl Icahn Says Sold Entire Apple (Nasdaq: AAPL) Stake on China Woes: CNBC (English article)
Bottom line: Jin Jiang is likely to ultimately drop its pursuit of Accor and sell its entire stake in the French hotelier, which is showing signs of growing uneasiness in an unwanted courtship by its Chinese suitor.
Jin Jiang contemplates upping its Accor stake
Leading Chinese hotelier Jin Jiang (HKEx: 2006; Shanghai: 600754) and worldwide peer Accor (Paris: AC) are becoming increasingly uncomfortable bed mates, with word that the former may want to boost its stake in the latter. This particular alliance was engineered by the state-run Jin Jiang, which early this year acquired 5.5 percent of Accor by purchasing shares of the French hotel operator in the open market. Jin Jiang later upped that stake to nearly 12 percent, though again it’s not clear if it bought the shares with the approval of Accor, operator of the upscale Novotel and Sofitel brands.
The history of this relationship, combined with overtones in the latest reports, all hint at an uneasy courtship that is taking place between these 2 companies. Jin Jiang is clearly interested in Accor’s global background and expertise, as it embarks on a recent buying spree in an attempt to build China’s first worldwide hotel company. But Accor seems far less interested in being pursued by Jin Jiang, probably because its suitor is an unfamiliar company with very little experience running a global brand. Read Full Post…
The following press releases and news reports about China companies were carried on April 13. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Buys Control of Lazada in $1 Bln Bet on SE Asia E-commerce (English article)
Shanda Group Makes Long Term Strategic Investment In Legg Mason (NYSE: LM) (PRNewswire)
Private Chinese Firm Sharing Mobile in Deal to Buy Nigerian Telco GiCell (Chinese article)
China Hotelier Jin Jiang (HKEx: 2006) Said to Weigh Boosting Accor (Paris: AC) Stake (English article)
Car Services Firm UCar secures $569 Mln, Files for Listing on New Third Board (English article)
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…
