Accor is no longer a majority shareholder in Huazhu but maintains the partnership. (Photo: Deutsche Hospitality)
French hotel giant Accor significantly lowers its investment in China’s Huazhu Group making industry experts wonder why.
French hotel group Accor has sold half of its stake in Chinese hospitality group Huazhu, as the Chinese company sets its sights on Europe.
Skift went into detail about the sale of the shares, and we take a look at what they had to say.
Accor sheds $451m of Huazhu stake
French hotel group Accor will no longer be a majority shareholder of Huazhu Group, a similarly positioned hotel company in China, after selling off half of its share in the company to the tune of $451m. Accor had acquired the large share in Huazhu in January 2016.
According to Accor’s spokesperson, the group took the decision to offload their stake in the company because the time had come to realise the profits from their investment in Huazhu.
During their time as major stakeholders, Accor has seen Huazhu add 200 properties in China and increase its value fourfold. Accor will retain a 5.8% share in the company and commits to continuing its partnership with them.
Huazhu competing in Europe
Although Accor says they are pulling out because they have gotten what they came for, there is speculation that the French hotel giant fears a rivalry with Huazhu, as Huazhu recently bought the German hotel company Deutsche Hospitality for $777m.
The acquisition of this company means that Huazhu will be able to branch out from its midscale portfolio into a more upscale and luxury segment.
Qi Ji, Huazhu’s executive chairman and CEO, says, “With the acquisition of Deutsche Hospitality, Huazhu now has a rich brand portfolio in each segment from economy up to the luxury and upscale segments. That’s why we choose to enrich our luxury and upscale brand portfolio through acquisition. This will help to shorten our own learning period, and we will benefit from new perspectives of our employees in the newly acquired business.”
Expansion in Europe and China
Not only will Huazhu now be able to compete in both the midscale and luxury segments in Europe, but now they will also be able to bring their luxury arm in Deutsche Hospitality back to China.
Ji aims to double its size in the next three to five years, from 5,151 hotels with 504,414 rooms to more than 10,000 hotels. Other benefits will include mutual claims on both group’s loyalty programs and improvements in customer interfaces.
Let’s take a look at a few hotel projects by Deutsche Hospitality:
Steigenberger Europäischer Hof
The unique and varied Deutsche Hospitality portfolio includes the Steigenberger Hotels and Resorts, Jaz in the City, and IntercityHotels. Deutsche Hospitality was sold to chinese group Huazhu 2019.
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