Chinese Budget Operator Bidding for Carlyle’s $1.1B French Hotel Chain

Chinese budget hotel operator Green Tree Inns is said to be pursuing a bid of as much as €1 billion ($1.07 billion) for an 80 percent stake in a French hotel brand currently held by US private equity giant Carlyle Group.

The decade-old Shanghai-based hotel group will be facing off against a global field of hotel and private equity investors in bidding for B&B Hotels, a Brittany-based operator of low-priced inns in Europe, according to reports in the French press. Other potential bidders are expected to include European private equity firm PAI and the private investment wing of Goldman Sachs.

Chinese investors have shown a preference for hotel assets and hospitality chains in recent years, having bet on such trophy assets as the $1.95 billion Waldorf Astoria in New York, amidst a boom in tourism by mainland visitors.

Carlyle Seeks to Double Its Money on French Chain

In July of this year Carlyle reportedly engaged Morgan Stanley to look into the possible sale or IPO of B&B Hotels. The Washington DC-based private equity firm currently holds an 80 percent stake in B&B, which it acquired in 2010 for reported €480 million.

Carlyle is said to be expecting to double its investment in the hotel chain by selling its stake for around €950 million to €1 billion. According to its website, B&B now operates 300 hotels across Germany, Italy, Morocco, Poland, and Portugal, as well as in France.

Greentree Hopes to Expand into Europe

The bid by Shanghai-based Greentree would extend the company’s rapid expansion into a new continent, after it grew from concept to a chain of more than 1,400 hotels in just over a decade, according to its website.

Founded in 2004 by US-educated Chinese entrepreneur Alex Xu, Greentree now operates five separate hospitality brands in China, and already has expanded into other countries in Asia. Specialising in budget hotels for business travellers in China, according to its website, Greentree is already the 9^th largest hotel franchise group globally, and the 13^th largest hotel group in the world by number of properties.

While Greentree is not well-known outside of China, it is part of a wave of Chinese investments in hotels that has captured attention around the world.

Chinese Investors Go for Hotels

Besides the $1.95 billion acquisition of the Waldorf Astoria by China’s Anbang Insurance last year, other Chinese insurers have snatched up trophy deals including Sunshine Insurance’s acquisitions of New York’s Baccarat Hotel and the Sheraton on the Park in Sydney.

Chinese firms have also targetted higher profile hotel chains globally, with three mainland groups — including the country’s sovereign wealth fund CIC — said to be competing to acquire the Starwood Hotels and Resorts Group at a price that could reach $12 billion or more.

Also, in 2014, China’s largest hotel group, Jin Jiang, made its own French connection picking up Le Louvre Hotel Group from Starwood Capital in a deal valued at more than $1.49 billion.

In China, the government has been encouraging its cashed-up corporations to expand globally, as a way to make its biggest companies more competitive, and to find more effective approaches to investing the country’s foreign exchange reserves.

With more than 100 million Chinese travelling internationally last year, tourism and hospitality deals have become popular for Chinese investors both domestically and globally.