Chinese investors continued their harvest of international hotels last week when the Jin Jiang Group agreed to buy France’s Louvre hotel chain for a sum said to be in excess of $1.49 billion.
In the deal due to close in the first quarter of 2015, Shanghai-based Jin Jiang will be acquiring Europe’s second-largest budget hotel chain from US-based Starwood Capital, which indirectly has extensive operations in China through the many Starwood-managed hotels on the Chinese mainland.
The Louvre acquisition is the latest in a string of hotel deals involving Chinese companies, and coincides with an increase in overseas travel by Chinese residents that reached 98.19 million visits in 2013.
Jin Jiang Outduels Competitors to Buy French Chain
While exact financial terms were not made public, sources familiar with the deal were quoted in multiple media outlets as saying the price exceeded €1.2 billion ($1.49 billion). A report in the Financial Times indicated that other bidders for Louvre included private equity firms PAI Partners and Oaktree, as well as France’s Accor Group.
In April of this year, state-run Jin Jiang had offered to buy Louvre for approximately $1.38 billion, however, Starwood opted to go with a banker-brokered bidding process, according to a report in the Wall Street Journal.
In selling to Jin Jiang, however, Starwood departed from that process to strike a deal with Jin Jiang, the Journal said. Starwood Hotels, which is among the primary assets of Starwood Capital, currently operates 240 hotels in China under its St. Regis, Westin, Le Méridien, Sheraton and other brands, according to the company’s website.
“There is strong complementary synergy between Louvre Hotel and Jin Jiang in brand portfolio, geographic footprint and guest base,” said Yu Minliang, chairman of Jin Jiang International Holdings.
Jin Jiang owns and operates over 1,700 hotels in 11 countries, but is primarily active in China, where it has long been the primary hotel concern of the Shanghai government, and owns many of the city’s landmark hotels.
Louvre Hotels has a network of more than 1,100 hotels in more than 40 countries worldwide, ranging from one to five stars under the Premiere Classe, Campanile, Kyriad, Tulip Inn, Golden Tulip, Kyriad Prestige and Royal Tulip brands.
In November 2011, Louvre Hotels Group and Chinese hospitality and travel conglomerate Jin Jiang International Holdings established a commercial partnership which notably introduced co-branding for some hotels in major cities in China and France.
Deal for French Hotel Chain the Latest in Chinese Hospitality Buys
While Jin Jiang may not have been the highest bidder for Louvre Hotels, Chinese companies are seemingly falling over each other in a rush to buy overseas hostelries, following a string of recent acquisitions.
In early October China’s Anbang Insurance Group set records for the largest acquisition of a US real estate asset by a Chinese buyer and for the most expensive purchase ever of a US hotel when it bought New York’s Waldorf Astoria for $1.95 billion.
In June, Hong Kong’s Fu Wah International Group purchased the Melbourne Park Hyatt Hotel for A$130 million (US$113 million) from Singapore’s sovereign wealth fund, GIC.
The Louvre acquisition is not the first major Chinese hotel deal in France either, after Hong Kong-listed Kai Yuan Holdings Ltd, a steel company belonging to a mainland billionaire, agreed in June to buy the Marriott Champs-Elysee in Paris for 344.5 million euros ($468 million).
In an analysis of the trend towards Chinese hotel acquisitions published earlier this month by real estate services company JLL, Scott Hetherington, the head of the company’s Hotels and Hospitality Group noted that, “Chinese investors are focusing on cities with an existing Chinese community and a demand from Chinese tourists.”
JLL cited London, Paris, New York, LA, San Francisco, Vancouver and Sydney and Hong Kong as examples of gateway cities profiting from Chinese travellers’ thirst for global travel.
During the last eighteen months a Shenzhen-based developer acquired a hotel in Los Angeles; Dalian Wanda announced plans for its own global hotel chain, including billion dollar hotels in New York and London, and a number of other Chinese overseas development projects have been agreed to with sizable hotel components.