Accor, the largest hotels group in Europe, has entered into an agreement to offload about 5 per cent stake in Chinese hotel operator and franchisor Huazhu Group Limited for $451 million.
The French hospitality company will continue to own approximately 5 per cent of Huazhu, and Sébastien Bazin, chairman and CEO of Accor, will remain on the Chinese company’s board of directors.
Accor, which injected capital into Huazhu in January 2016, will register a 4.5 times increase on its initial investment in the Chinese company upon completion of the deal, it said in a statement.
“Accor and Huazhu will continue to develop their successful partnership and growth dynamic initiated four years ago, which has enabled the openings of 200 economy and midscale hotels in China, mainly under the ibis, Novotel and Mercure brands,” said Accor.
Paris-based Accor, which is also the sixth-largest hospitality company worldwide, plans to open an additional 250 properties in the next three years.
Listed on the Euronext Paris Stock Exchange, the company currently offers 4,900 luxury and economy hotels, resorts and residences across 110 countries worldwide.
The partnership between the two companies started about five years ago when Accor and Huazhu sealed a long-term alliance in December 2014. In January 2016, Accor picked up a 10.8 per cent stake in Huazhu as well as a seat at the company board, while Huazhu took a non-controlling stake of 29.3 per cent in Accor and two board seats in its luxury and upscale operating platform for Greater China.
Huazhu, already the world’s fifth-largest hotel group by market capitalisation, had 5,151 hotels with 504,414 rooms in operation as of September 2019. Its hotel turnover increased 19 per cent year-over-year to 10 billion yuan ($1.42 billion), and its net revenues grew 10.4 per cent to 3.1 billion yuan ($441 million) for the third quarter of 2019, according to the latest financial results.
The Chinese hotel operator and franchisor is aggressively expanding at home and abroad. Huazhu agreed to pay 700 million euros ($781 million) in cash for all shares in Frankfurt-based Deutsche Hospitality in early November, as it seeks to expand its global presence with the addition of one of Germany’s most well-known luxury hotel chains.
Deutsche Hospitality, founded by Albert Steigenberger in 1930, operates a portfolio of brands including MAXX by Steigenberger, Jaz in the City, IntercityHotels and Zleep.