Dalian Wanda Announces 2 US$1Bil Hotels – Chairman Says Failure is Their Tuition

With two announcements of plans for billion dollar hotels during the month of June, China’s Dalian Wanda group is making clear that it intends to create its own global hotel brand.

The hotel investments include US$1.1 billion to develop a five star hotel in London, and US$1 billion for a five star hotel project in New York.

Known in China for its successful development of retail malls and other commercial real estate, including hotels managed by international hotel brands, the new hotel ventures appear to be part of a broader movement by Wanda to expand globally and diversify beyond real estate into retail-oriented businesses.

But how well does any amount of success in any company’s home market translate into the ability to execute deals globally, and how far does expertise in real estate carry you in the hotel and retail markets? Dalian Wanda may be about to find out.

The privately held Wanda Group, which is headed by billionaire Chairman Wang Jianlin, last year bought the American cinema chain AMC Entertainment for $2.6 billion. The move into hotels appears to a related venture into global businesses, which are real estate related, but not necessarily property driven.

“Through the international development of Wanda hotels, we are confident that we will be the leader in bringing branded Chinese luxury hotels to the global market, where they have long been absent,” said Chairman Wang at the press conference announcing his London deal.

The company has made clear that, unlike its existing hotel projects in China, its London and New York projects will be branded with the Wanda name. In China, Wanda has developed 38 five-star hotels, but in all of these projects it has relied on partnerships with foreign hotel brands including Sofitel, Westin, Pullman, Hilton and Sheraton.

In addition to the London deal, Wang also revealed his wide-ranging ambitions to have hotels in eight to 10 cities across the world within the next decade, and confirmed a luxury hotel project in New York that is currently in the works.

In the words of The Wall Street Journal,

…the hotel industry, in which Wanda will be the first Chinese company to step into the luxury segment, is fierce and full of well-established rivals that have cornered the luxury-hospitality market and have long navigated the high expenses involved with serving luxury consumers globally.

Creating a new Chinese luxury hotel brand to compete with the global heavyweights would seem challenging to accomplish in China, but Wang seems ready to attempt this feat on a global scale.

In an interview with the Journal, Wang seemed undeterred by the challenge facing his new hotel venture.

”Half of international acquisitions are going to fail, especially for China, which is just going international, but Chinese companies will become international companies sooner or later, so we have to take this step. Failures are our tuition.”