China Lodging saw a fall in revpar in the fourth-quarter, while continuing to build its pipeline.
The results came as Jin Jiang’s acquisition of Groupe du Louvre gained board approval, with the new owners seeing an immediate boost as nine former Motel One hotels joined the portfolio.
At China Lodging same hotel revpar was down 3% in the fourth quarter, with occupancy down three percentage points at its economy brands, to 91%. It added 146 new hotels in the quarter, taking the portfolio to 1,995 properties.
Room rates changed little year on year, but slipped from the third quarter. The company’s midscale and upscale hotels delivered a stronger performance, with revpar up 4% in the quarter.
The results were largely good news for the company’s new relationship with Accor. As reported earlier this month in Hotel Analyst, China Lodging has recently formed a strategic alliance with Accor to open 350 to 400 new hotels in the next five years under Accor’s budget and mid-scale brands in China.
Under the terms of the agreement China Lodging – also known as Huazhu – will become the master franchisee for Accor’s economy and midscale brands, which include Grand Mercure, Novotel, Mercure, Ibis and Ibis Styles in mainland China, Taiwan and Mongolia. It will also take on the current franchise and manachise economy and midscale business and certain Ibis-owned and leased hotels.
Last year China Lodging CEO Qi Ji said that the company’s primary strategy remained “fast network expansion” driven by multiple brands and the manachised business. The company pointed to the economy market in China in 2013, where an estimated 80% of room stock was unbranded.
As France’s Accor seeks to solidify its position in China, China’s Jin Jiang has cemented its own in Europe as the company’s board gave its approval to the acquisition of Groupe du Louvre. The EUR1.2bn deal will see Jin Jiang add 1,115 hotels, of which 970 are in Europe (820 in France).
The group looks set to add another nine to its estate with the sale by Motel One of a nine-property portfolio in Germany to FDM Management, the hotel operations arm of Fonciére des Regions, for EUR49m. The hotels will be rebranded and will operate under Louvre Hotels Group’s Premiere Classe brand.
Motel One described the hotels as part of a “clean up” of the portfolio, with the sites in question described as “peripheral”. Dieter Müller, founder & CEO, Motel One Group, said: “We are convinced that the clear positioning of the brand Motel One is an important success factor is to survive in the increasingly competitive environment.” (translation).
At the end of last year Fonciére des Regions told French web portal Immoweek that the company, which has other properties under Louvre brands, was looking to build its portfolio further. Motel One may not be the only one cleaning up in Europe.
HA Perspective [by Chris Bown]: Two Franco-Chinese associations have cemented links between French brands and their Chinese counterparts. Though very different arrangements, they show that deals across borders can be done.
Jin Jiang’s slow walk up the aisle alongside Starwood Capital has given them a hotel group in Louvre with a substantially French portfolio. But – witness the FDM deal – it comes with an active management team that is ploughing on with initiatives such as the new foray into Germany. And FDM could help deliver more hotels outside of France, to improve the balance of the very lopsided European presence that Louvre currently has.
For Motel One, the sale of nine hotels enables it to conveniently divest itself of its earlier, smaller and less well located properties. The trendy German budget operator has more recently been opening larger hotels, in central city locations, and will need little time to recycle the cash from the sale, into its aggressive Europe-wide expansion programme.