Consolidation has bitten in the economy segment in China with the take-out of 26-strong chain Top Star by Home Inns, the dominant Chinese player.
The NASDAQ listed company is paying 340 yuan ($45m) including debt for the 4,200 rooms. The move will take Home to more than 320 hotels.
David Sun, Home’s CEO, said: “We are extremely excited to bring into our portfolio an additional 26 hotels. By doing so, we are solidifying our leadership position in China’s economy hotel market.
“In addition we are demonstrating our ability to grow rapidly through acquisition as well as organically.”
The massive roll out of the branded economy segment in China – it has grown to an estimated 100,000 rooms in just five years – is expected to lead to further consolidation.The target in the latest transaction was formed just two years ago.
The largest rival to Home is Jinjiang International Hotel Development Company which has about 160 hotels in operation. Home had initially grown through direct management but it is expanding franchising which already accounts for about 30% of its portfolio.