Room to grow in ho­tel sec­tor

Chi­nese in­vestors are grab­bing up lux­ury ho­tels in­ter­na­tion­ally

China Daily (Canada) - - FRONT PAGE - By WANG WEN in Bei­jing wang­wen@chi­

Chi­nese com­pa­nies are ex­pand­ing into the global ho­tel mar­ket with a raft of plans to buy or build lux­ury prop­er­ties af­ter a se­ries of high-pro­file ac­qui­si­tions.

Ear­lier this year, An­bang In­sur­ance Group paid $1.95 bil­lion for the iconic Wal­dorf As­to­ria Ho­tel in New York’s swanky Man­hat­tan, while the Sun­shine In­sur­ance Group snapped up the Bac­cart Ho­tel in the same up­mar­ket dis­trict for $230 mil­lion.

Dalian Wanda Group Corp Ltd, the mas­sive Chi­nese con­glom­er­ate, is another key player and has an­nounced plans to open up to 10 ma­jor ho­tels in Europe and the United States in the next five years.

“In­vest­ment into over­seas ho­tel prop­er­ties by Chi­nese com­pa­nies will be much more this year,” Xia Yangyang, di­rec­tor of in­ter­na­tional cap­i­tal at global prop­erty agents Jones Lang LaSalle in China, said. “And that in­vest­ment will con­tinue to grow in the fu­ture.”

Sta­tis­tics from a re­port re­leased by Jones Lang LaSalle showed that Chi­nese com­pa­nies last year pumped $16.5 bil­lion into over­seas real es­tate mar­kets, with the ho­tel sec­tor ac­count­ing for 6 per­cent.

Europe, Aus­tralia and the US were the main des­ti­na­tions for in­vest­ment, the re­port said. “One of the big­gest trends of 2015 is the surge in Chi­nese in­vest­ment into ho­tels glob­ally. This is de­spite some un­der­ly­ing con­cerns across the globe, such as the Greek debt cri­sis and the re­cent fluc­tu­a­tions in the Chi­nese stock mar­ket,” Mark Wynne Smith, who leads the global ho­tels and hos­pi­tal­ity team at Jones Lang LaSalle, told trav­el­dai­ly­ .

The latest Chi­nese com­pany to en­ter the over­seas ho­tel in­dus­try is In­ter­na­tional Ltd. The coun­try’s largest online travel agency has launched Xiel­ing, an In­ter­net fund man­age­ment plat­form, with Sin­ga­pore-based F&H Fund Man­age­ment and Huiyu As­set Man­age­ment in China.

Ctrip and its part­ners hope to raise 2.5 bil­lion yuan ($403 mil­lion) in the first phase with the fund be­ing used for over­seas ho­tel projects.

“About 90 per­cent will be raised among Chi­nese in­sti­tu­tional in­vestors with the com­pany pick­ing up the rest,” a source close to Ctrip said.

“The in­vest­ment fo­cus will be on ho­tel projects in Europe, where many high qual­ity prop­er­ties are pro­fes­sion­ally man­aged but un­der­val­ued,” he added.

A cru­cial rea­son be­hind Ctrip’s pro­ject is the boom­ing over­seas tourism mar­ket.

Last year, the num­ber of Chi­nese out­bound tourists hit 114 mil­lion, ac­cord­ing to the China Tourism Academy. In the first half of this year, the num­ber reached 61.9 mil­lion, an in­crease of 16 per­cent com­pared to the same pe­riod in 2014.

“The out­bound tourism mar­ket is part of the de­ci­sion to set up the Xiel­ing fund, but it is not the only rea­son,” Dai Bin, head of the China Tourism Academy, said. “As an online travel agency, Ctrip in­tends to ex­tend its brand through in­vest­ing in over­seas ho­tels.”

This trend to go global was started by Chi­nese in­sur­ance com­pa­nies look­ing for blue chip in­vest­ments. At the start of the year, An­bang In­sur­ance pur­chased a tro­phy as­set in the Wal­dorf As­to­ria Ho­tel in New York from Hil­ton World­wide Hold­ings Inc.

The deal was of­fi­cially closed in Fe­bru­ary with the Hil­ton group stay­ing in charge of the day-to-day oper­a­tions.

“Hil­ton will op­er­ate the ho­tel, the linch­pin of its port­fo­lio, for the next 100 years,” said Christo­pher Nas­setta, pres­i­dent and CEO of Hil­ton World­wide.


The Wal­dorf As­to­ria, the famed New York ho­tel, sold to An­bang In­sur­ance in 2014, is em­blem­atic of Chi­nese in­vestors’ in­ter­est in pur­chas­ing choice ho­tel prop­er­ties.

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