Jin Jiang International Wants to Expand Its European Luxury Hotel Portfolio

Jin Jiang International, a state-owned Chinese tourism conglomerate, was largely unknown outside of China until its 2015 high-profile acquisition of Europe’s second-largest budget hotel chain, Groupe Du Louvre. According to Pierre-Frédéric Roulot, the chief executive of Groupe Du Louvre who is responsible for implementing Jin Jiang International’s development strategies in Europe, the Chinese company is now looking to expand its European hotel portfolio by buying luxury hotels in major European cities. When Roulot was first appointed CEO by Jin Jiang International, he explained that he was excited to help Jin Jiang International’s ambition to become “the world’s leading player in its traditional markets.” It appears that expansion into Europe’s luxury hotels is the next step in the plan to achieve this goal—and Groupe Du Louvre’s Paris offices have become the Chinese group’s platform for further expansion into Europe. And there are reasons to be positive about its prospects in Europe, especially as a hotel chain of choice for Chinese tourists in Europe. Mr. Roulot told Reuters in an interview that despite the drop in Chinese tourist arrivals to France that followed high-profile terror attacks and a wave of robberies targeting Asian tourists, Jin Jiang International’s properties in France have seen between an 8-10 percent increase in Chinese nightly stays in 2016. Groupe Du Louvre’s closest competitor and Europe’s budget hotel market leader, AccorHotels, has also been subject to Jin Jiang International’s interest for expansion across the continent. Jin Jiang International already holds 15.6 percent of the shares in AccorHotels, and speculation about an increase of this stake to 29 percent sent the Accor stock soaring earlier this year. It has also been rumored that AccorHotels sought China’s HNA Hospitality group to counter Jin Jiang International’s alleged offer, but neither of the two companies has yet made moves to acquire more AccorHotels stocks. Jin Jiang International isn’t the first company to eye European luxury hotel assets. Another Chinese conglomerate, Fosun Group, invested in and later fully acquired Club Med, another Paris-based tourism company that targets the high end of the market with its vacation villages.[also facilitated club med expansion in China] In 2015, Fosun Group also acquired the historic Palazzo Broggi in Milan for a reported US$381 million in addition to multiple real estate investments across the United States and Australia. With growth of Chinese tourism to many parts of western Europe slowing down as a result of concerns surrounding tourism and the recent refugee influx, it appears that Chinese investors, such as Jin Jiang International, are now eyeing the upper end of the market instead of expanding their budget hotel portfolio that is popular among Chinese tour groups. This also fits in line with general market trends seen throughout Europe: less package tour groups and more experience-seeking free independent travelers (FITs). Roulot didn’t expand on what type of acquisitions Jin Jiang International is looking at in Europe, and from the looks of it, major European luxury hotel chains such as Mövenpick Hotels & Resorts, and Kempinski Hotels aren’t up for grabs—Saudi Arabia holds a significant stake in the former, and the Thai Crown holds a majority stake in the latter. One possibility would be to undertake a similar strategy to Fosun Group—acquiring numerous independent high-profile properties throughout Europe. It could also take inspiration from Anbang Insurance Group, which acquired the Waldorf Astoria, and later went on to acquire 15 of U.S.-based Strategic Hotels & Resorts’ 16 luxury properties. With many luxury hotel chains locked up for investment, acquiring independent hotels and hotel real estate may be the way to go for Jin Jiang International in its efforts to bolster its European portfolio.

Jin Jiang International Wants to Expand Its European Luxury Hotel Portfolio

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Published November 25, 2016

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Jin Jiang International Wants to Expand Its European Luxury Hotel Portfolio