• Anbang continues to pursue hotels

Anbang Group has acquired the Doubletree Amsterdam from Blackstone Group for a reported EUR350m.

The hotel was one of a group of three Blackstone was selling and marks ongoing inroads into Europe by China-based investors.

The 557-room DoubleTree by Hilton Amsterdam Centraal Station was sold through CBRE Hotels. Jan Steinebach, head of CBRE Hotels in the Benelux, told us: “We have a great appetite for hotel real estate in Amsterdam. There is a moratorium on new hotel development which means that nothing can be added to the market unless its of added value, but that’s theoretical at the moment – we have 28,000 rooms and 6,000 approved, under development or under construction, with the majority due in the next three to four years.

“In the past years the new developments have been absorbed – occupancy is over 80% even with all the Airbnb supply. It is our expectation that the market will be able to absorb the new developments. A lot of then are large – 4, 500-room hotels with conference facilities. It is the aim of the municipality to attract the corporate market – it is a fear that the city cannot take more tourists.”

Commenting on the identity of the buyers, Steinebach added: “The interest of Asian capital is larger than it used to be, not only China, but Singapore, Korea, Thai money is looking for investments in Western Europe. They are long-term holders and, it might take a bit longer to get [state] approval  but it always goes through.”

Blackstone acquired the eight-strong Mint group of hotels in 2011 for a reported GBP610m, with the hotels having previously traded under the City Inn name. September last year saw the Doubletree by Hilton Dublin Burlington Road sold to DekaBank for approximately EUR182m and the DoubleTree by Hilton London – Tower of London sold to the Bhatia family for a figure close to GBP300m. The Dublin sale was the biggest deal of the year in the city in 2016.

The deal is the latest in a series between Anbang and Blackstone, starting with the USD1.95bn purchase of Waldorf Astoria in 2014, followed by 15 properties of the 16-strong Strategic Hotels & Resorts portfolio in 2016 for approximately USD5.5bn.

Julia Dai, director, Horwath HTL, China, Beijing, told us: “Outbound investment activities have slowed down since January 2017.  However, the positive increase in May shows signs of recovery in outbound investment.

“I think Anbang should maintain interest in acquiring overseas hotels as they have acquired several insurance companies in Europe.  Good hotel assets could diversify their investment and offer stable cash flows.”

Dr Joanne Jia, Head of Asia, Christie & Co, added: “For Asian investors the changes to the restrictions on the movement of capital out of China has particularly affected those hoping to invest in the hospitality sector and we have seen fewer large transactions from Chinese investors. Although there is a much longer and complicated approval process we expect changes to be made to the system later this year or early next year to lift the restrictions on outbound capital.”

According to EY’s most-recent issue of its China outbound investment report, China’s outward foreign direct investment in 2016 rose 30% year-on-year to a record high of USD188.8bn.

EY predicted that in 2017, China’s outbound investments were expected to steadily slow down, and Chinese enterprises would further strengthen their risk management capabilities to improve the quality of their investments.

Loletta Chow, global leader, EY’s China Overseas Investment Network, said: “Looking back on 2016, China continued its ‘going global’ process and became the driving force of the global capital market. Chinese investors’ footprint is spreading across five continents. They not only accelerated investment in the countries along the Belt and Road, but also invested more in the US, Europe and other developed markets.

“Chinese enterprises nowadays are focusing on both ‘going global’ and ‘upgrading the businesses to the higher end of the value chain’. In 2016, the major value proposition of Chinese investors’ overseas mergers and acquisitions shifted from increasing productivity to improving industrial structures and the global allocation of resources. Thus, China’s overseas M&A activities are growing synchronously and rapidly across diversified sectors.”

HA Perspective [by Katherine Doggrell]: At the time of writing, press reports suggested that the authorities in China had barred Wu Xiaohui, Anbang’s chairman, from leaving the country, amid rumours of an investigation into the company’s insurance products, which are funding its overseas spending. Anbang described it as “just a rumour”.

There seems little doubt that China’s investors will continue to make their mark on the hotel sector. What has been perplexing observers is whether there is any strategy behind the past year’s investment, or it has been a case of whatever sticks.

Steinebach had some insight, commenting: “Unbranded hotels are very scarce, but Asian investors are creative enough and already have strong ties in their home markets with the larger brands, so conversions are easy. What I don’t see is demand for local Asian brands in the European markets. But they’re no different to any investors who love to keep their options open over rebranding.”

Rebranding may now mean a switch in global flags, but as the Asian investors look to ride the wave of outbound tourism from the east, it could see them well-placed for future changes which favour the growth of groups such as Huazhu.

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