Sunday 22 April 2018

Chinese focus on France's Accor

The Peace Hotel in Shanghai, owned by Jin Jiang International.
The Peace Hotel in Shanghai, owned by Jin Jiang International.

Vinicy Chan

Jin Jiang International, which controls China's largest lodging company by market value, is considering increasing its stake in French hotelier Accor, people familiar with the matter said.

Jin Jiang, already Accor's biggest shareholder with an almost 12pc stake, could build up its ownership in the Paris-based company to about 20pc. The Shanghai-based company would be interested in gaining more influence over Accor's management, according to the people, who asked not to be identified because the deliberations are private. Accor shares jumped as much as 3.8pc in Paris trading, the most intraday in about a month.

An additional 8pc stake would be worth about €719m at Accor's current share price. Accor has hired its own advisers to guide managers on how to proceed.

"Jin Jiang is one of the fastest-growing Chinese companies in the hotel industry, and they've been looking to invest more outside of China," Wouter Geerts, a lodging analyst at Euromonitor International in London, said. "Now that more Chinese travellers are taking international trips, it's important for Jin Jiang to benefit from that."

Both companies have been part of the recent wave of consolidation in the hotel industry. Jin Jiang, which owns Shanghai's more than eight-decade-old Peace Hotel, has been building its stake in Accor in a bid to expand its global franchise after it bought Groupe du Louvre in 2014. Accor, Europe's biggest hotel operator, said last week it agreed to buy Onefinestay for €148m to expand in the luxury serviced-home market.

Jin Jiang hasn't made a final decision, and it may opt to keep its current shareholding level, according to the people. A spokeswoman for Accor declined to comment, while representatives for Jin Jiang didn't answer several calls seeking comment.

Chinese companies have announced $97bn of overseas deals in the first three months of the year, part of an unprecedented shopping spree that's already close to topping the total amount spent in either of the last two years. The trend is poised to continue into the second quarter.

HNA Group, the owner of China's fourth-largest carrier, said it agreed to buy Swiss airline catering company Gategroup for 1.4bn francs (€1.1bn).

Accor makes a good investment for Jin Jiang, because Chinese travellers are already familiar with its brands, according to Euromonitor's Geerts. The French company's chief executive, Sebastien Bazin, has added luxury brands, sold underperforming assets and invested in online travel sites since taking over leadership nearly three years ago.

"Accor has been doing quite well lately," he said. "They're in a good position to benefit from the upturn in the market in Europe, and they're very much involved in the sharing economy." (Bloomberg)

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