US private equity giant Carlyle Group achieved a successful exit from its investment in Crystal Orange Hotel Holdings when China Lodgings Holdings agreed to buy out its budget hotel rival for RMB 3.65 billion ($532 million), according to a statement today by Nasdaq-listed China Lodgings.
Carlyle had purchased a 49 percent stake in the now 11-year-old operator of the Crystal Orange, Orange Hotel Select and Orange Hotel brands in 2012 for an undisclosed sum. Under the terms of the transaction announced today, a Hong Kong subsidiary of China Lodgings Holdings, is acquiring 100 percent of the equity in Crystal Orange Hotels.
China Budget Hotel Giant Just Got Bigger
With more than 3,200 hotels across 367 cities at the end of 2016, China Lodgings is one of the mainland’s largest hotel groups, and is controlled by Ji Qi, who co-founded Chinese online travel portal Ctrip before going on to set up the hospitality group.
China Lodgings operates the Hi Inn, HanTing Hotel, Elan Hotel, JI Hotel, Starway Hotel, Joya Hotel, and Manxin Hotels & Resorts brands in China. The group is also the master franchisee for Mercure, Ibis and Ibis Styles hotels in Greater China, and holds co-development rights for Grand Mercure and Novotel properties in the region.
Carlyle Has Learned to Cash In While Checking Out
Mid-range hotels have been a major growth sector in China’s economy as the country’s growing middle class becomes more mobile and more companies are sending executives on business travel.
The sector has been particularly kind to Carlyle, which together with Sequoia Capital China in 2013 led the buyout of China’s second-largest budget hotel chain 7 Days Group Holdings Ltd for $688 million. The private equity firm exited that investment when China’s Shanghai Jin Jiang International Hotels bought out the parent company of 7 Days Group for $1.3 billion in 2015.