Wanda chair Wang Jianlin is continuing his series of asset sales
Debt-ridden Dalian Wanda Group has agreed to sell its hotel management arm to a Tencent and Trip.com-backed travel company for RMB 2.5 billion ($347 million), as the property conglomerate continues to shed assets.
Wanda Hotel Development Limited, which is 65 percent-owned by China’s former richest man Wang Jianlin, is selling its entire interest in Wanda Hotel Management (Hong Kong) to Chinese online travel agent Tongcheng Travel Holdings, according to separate announcements late last week by the two HKEX-listed firms.
Proceeds of the sale will help Dalian Wanda chairman Wang Jianlin, who controls 65 percent of Wanda Hotel Development, reduce debt at his property and entertainment group, continuing a disposal streak that includes the $8.3 billion sale of the group’s mall management business to a PAG-led consortium in March of last year.
“The achievement of equity cooperation will help both parties realize complementary advantages and jointly enhance their competitiveness in the Chinese hotel market,” said Wanda Hotel Management in a statement posted to its website.
Wanda Downsizing Continues
The sale of Wanda Hotel Management gives Tongcheng the rights to manage 204 hotels with over 40,200 rooms with the transaction reflecting a 9.5 times multiple of the target company’s 2023 adjusted EBITDA.
Wanda sold its Reign hotel on Shanghai’s Bund last year
Wanda Hotel Management, which does not hold hotel properties, operates nine hotel brands including the high-end Reign, Vista and Realm marques and generated HK$892 million last year as it accounted for about 90 percent of Wanda Hotel Development’s revenues last year.
In addition to the hotels currently in service, the company has 376 more properties under contract which have yet to open, according to Wanda Hotel Development’s 2024 annual results.
The deal continues a string of disposals by Wanda Group as it attempts to lessen its debt load, including giving up its management of a portfolio of 496 malls to the PAG consortium last year. Earlier in 2024 the group had sold its flagship hotel on Shanghai’s famed Bund to an Indonesian tycoon for an undisclosed sum.
Last November, Wanda Group reportedly agreed to sell a 92 percent stake in British yacht builder Sunseeker International to US private equity firm Lionheart Capital and Italy’s Orienta Capital Partners for £160 million. Wanda Group originally acquired the majority stake in Sunseeker International for £320 million in 2013.
Wanda also sold its stake in Legendary Entertainment last year, after having owned the studio through a $3.5 billion acquisition back in 2016, with Apollo joining as a minority investor in 2022.
The hospitality division of Wang Jianlin’s empire has focused on hotel management since Dalian Wanda sold a portfolio of 73 hotels to Guangzhou R&F for RMB 18.95 billion in 2017.
Wanda Hotel Development said that, following the disposal, it will focus on its remaining investment property leasing business and seek to diversify the investment to include culture and tourism. The transaction is subject to the approval of the company’s shareholders and relevant authorities.
Tongcheng Goes High-End
Suzhou-based Tongcheng Travel explained the acquisition as a way to expand in China’s high-end hospitality sector.
“The Company considers that the target group has an exhaustive portfolio of well-established high end hotel brands, which are highly influential in the domestic market. In addition, the management team of the target group is well-seasoned and possesses deep industry expertise. All these will enhance the company’s competitiveness in high-end hotels, thus further solidifying its position in the industry,” Tongcheng Travel said in its filing with Hong Kong exchange.
Formed in 2018 through the merger of Tongcheng Network and eLong, Tongcheng primarily targets consumers in lower-tier cities. With its mini program on Tencent’s WeChat platform driving the majority of traffic to its services, the company recorded profit of RMB 1.97 billion last year on revenues of RMB 17.3 billion and currently operates 2,300 mid-range and economy hotels across China.
In 2015 Dalian Wanda had invested RMB 3.58 billion in Tongcheng as it teamed up with Tencent and CITIC Capital in a RMB 6 billion financing round for the company,.
That deal, which then ranked as the largest single investment ever in China’s online travel business, made Wanda Tongcheng’s largest shareholder before it later sold off its stake. Tencent and Trip.com now each own about 21 percent of Tongcheng.
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