Chinese investors are chasing Chinese tourists as they too are wowed by the potential of this market, as well as a desire to diversify their assets in the face of a slowing Chinese economy. Hotels are becoming a hot asset for Chinese investors.
Hong Kong-based investment firm Kai Yuan Holdings recently purchased the Paris Marriott Hotel Champs-Elysees for 344.5 million euros. Chinese insurance group Anbang Insurance Group in October placed a bid for the Waldorf Astoria New York for $1.95 billion. In June, Fu Wah International Group purchased the Melbourne Park Hyatt Hotel for $130 million Australian dollars (US$113 million) from one of Singapore’s state investment firms, GIC Pte Ltd., reports The Wall Street Journal.
The latest hotel investment comes from China’s state-owned Shanghai Jin Jiang International, which just bought France’s Louvre Hotels Group from Starwood Capital Group. Jin Jiang, one of China’s largest hotel operators with both luxury hotels and a budget chain, paid approximately 1.2 billion euros for the French chain and the brands were valued at more than 11 times earnings before interest, taxes, depreciation, and amortization, according to Financial Times.
“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.
Chinese are going abroad in record numbers. Chinese outbound travel rose by 18 percent to 98.2 million tourists in 2013, according to the China National Tourism Administration. These Chinese investors believe they can attract more business because they know what their Chinese guests want beyond the typical Mandarin-language concierges, token Chinese food offerings, and slippers.
Furthermore, buying hotels abroad is not only a hedge against a slowdown at home, Chinese hotel investors are on a quest to establish an international reputation.
image source: flickr/wally gobetz