Date: May 2018
No. of Keys: 16,000
CapitalLand – Ascott – Citadine enters into JV with Huazhu and CJIA – The Manachise joint venture, which targets to sign 16,000 units under Citadines in China by 2025.
The deal was signed at the Ascott Hengshan Shanghai, by Mr Lee Chee Koon, CapitaLand’s Group Chief Investment Officer; Mr Kevin Goh, Ascott’s CEO, and Mr Ji Qi, Huazhu’s Founder and Executive Chairman, Mr Zhao Ru Quan, Huazhu’s Chief Financial Officer; Mr Tan Tze Shang, Ascott’s Managing Director for China and Head of Business Development, and Mr Jin Hui, President of Huazhu Hotels Group and Chairman & CEO of CJIA Apartments Group.
Listed on Nasdaq Stock Market since 2010, Huazhu has a market capitalisation of US$10.4 billion and the third largest market share in China’s midscale hotel segment with a total portfolio of over 380,000 hotel rooms.
CJIA, within a short span of over two years, has expanded quickly to collaborate with over 100 property management firms with 10,000 apartments.
With an initial registered capital of RMB 100 million (S$21 million), Ascott, Huazhu and CJIA will hold 50%, 10% and 40% respective stakes in the partnership. The joint venture will focus on growing Citadines in the first-tier Chinese cities of Shanghai, Beijing and Shenzhen for the initial years.
It has secured its first property in the Pudong district of Shanghai, which will come under the Citadines brand and enjoys easy access to the city’s financial district.
Mr Kevin Goh, Ascott’s Chief Executive Officer, said: “Our partnership with Huazhu and CJIA marks Ascott’s most significant and game-changing move in the asset-light manachise business to date.
Huazhu is one of China’s biggest hospitality players with significant local capabilities. CJIA has scaled up rapidly in the apartment rental space with more than 90% of its revenue from long-term rentals, which complements Ascott’s strong position in the long-stay business.
Ascott will be able to tap on Huazhu and CJIA’s vast expertise in operating properties through manachise, and their over 100 million-member database of domestic corporate and leisure travellers.”
“The joint venture will fast-track Ascott’s growth in China and accelerate the boost in recurring fee income given the shorter time-frame to open a new property.
Manachise will also allow our joint venture to actively manage the properties and maintain the quality of our world-renowned Citadines brand while enjoying franchise fees.
Coupled with Ascott’s international marketing network and experience in managing award-winning properties worldwide, our formidable partnership with Huazhu and CJIA will give us a leading edge in the market.”
Mr Goh added: “China remains our top source market globally with the Chinese constituting almost a quarter of our customers and continues to be the fastest growing segment.
With the joint venture’s target to sign 16,000 units under Citadines by 2025, this will more than triple our current Citadines portfolio in China.
We will also continue to grow our other award-winning brands including Ascott, Somerset, Tujia Somerset as well as the millennial-targeted, co-living brand lyf.
Besides manachise, Ascott will continue to expand through investments, strategic alliances, management contracts, leases and franchises.
We are confident of surpassing Ascott’s global target of 80,000 units this year, and doubling our portfolio to 160,000 units by 2023.”
Mr Tan Tze Shang, Ascott’s Managing Director for China and Head of Business Development, said: “Ascott has added 10 properties with more than 1,900 units in China so far this year, an increase of over 50% compared to the same period last year.
The joint venture with Huazhu and CJIA comes hot on the heels of Ascott’s recent partnership with specialty township developer Riverside Group to launch serviced residences in Zhejiang, Chongqing and future riverside themed towns in other key Chinese cities.
Ascott is also in partnerships with new economy leaders such as Tujia, China’s largest online apartment sharing platform, and Alibaba’s online travel service platform Fliggy.
THPT Comment: Ascott has more than 110 properties with over 20,000 units across more than 30 cities in China. Of these, 30 are Citadines-branded properties with close to 5,000 units in 19 cities.
First Seen: CapitalLand webiste