China’s Huazhu Group in €700m Takeover of Germany’s Steigenberger Hotels

Main Photo: The Steigenberger Frankfurter Hof

Date: November 2019

Location: Global

Name: Steigenberger (Deutsche Hospitality) with five brands

No. of Keys: TBA. Deutsche Hospitality operates 118 hotels and 36 hotels under development in 19 countries in Europe, the Middle East and Africa, under five separate brands.

Seller: Huazhu is buying Deutsche Hospitality from Egyptian tourism entrepreneur Hamed El Chiaty’s Travco Travel, which bought the group from the Steigenberger family in 2009. El Chiaty will stay invested in a Middle-East joint venture.

Buyer: Huazhu is a leading hotel operator and franchisor which, as of end-September, operated 5,151 hotels offering 504,414 rooms. Huazhu’s brands include Hi Inn, Elan Hotel, HanTingHotel, HanTing Premium Hotel, JI Hotel, Starway Hotel, Orange Hotel Select, Crystal Orange Hotel, Manxin Hotels & Resorts, Joya Hotel, and Blossom Hill Hotels & Resorts. In the pan-China region Huazhu also has the rights as master franchisee for Mercure, Ibis and Ibis Styles, and co-development rights for Grand Mercure and Novotel.

A statement from Shanghai’s Huazhu Group Limited said the deal is being made via a share purchase agreement with its wholly-owned subsidiary China Lodging Holding Singapore. The base cash consideration of about €700m is subject to net working capital and other post-closing adjustments.

The DH brands comprise: MAXX by Steigenberger, a new concept, which places the focus on the essential in accordance with its motto MAXXimize your stay. Jaz in the City branded hotels reflect metropolitan lifestyle and draw upon the local music and cultural scene. IntercityHotel offers more than 40 upper mid-range urban hotels, all of which located within easy walking distance of railway stations or airports. And Zleep Hotels – a well-known and successful hotel brand in Scandinavia offers service and design at cost efficient-rates. Steigenberger Hotels & Resorts has 60 hotels housed in historic traditional buildings and city residences

Deutsche Hospitality traces its beginnings back to 1930 when German entrepreneur Albert Steigenberger took over his first hotels and built it into a consortium. The group was renamed Deutsche Hospitality in 2016.

Huazhu’s business includes various models. Under the lease model, it directly operates hotels typically located on leased properties. Under the so-called manachise model, Huazhu manages hospitality assets through on-site hotel managers which it appoints and from whom it collects fees. With the franchise concept, Huazhu provides training, reservations and support services, and collects fees from franchisees but does not appoint on-site hotel managers.

In addition, Huazhu has a limited number of owned or partially-owned properties. As of September, it operates 83% of its hotel rooms under manachise and franchise models.

Huazhu is already the world’s fifth-largest hotel group by market capitalisation.

That values Deutsche Hospitality at 17-18 times its 2019 expected earnings before interest, tax, depreciation and amortisation or at less than 10 times expected 2022 core earnings.

Peers such as Marriott, Hilton, Accor, InterContinental and Hyatt trade at 11-14 times their expected core earnings over the next twelve months, while China International Travel and smaller peer Huazhu both trade at more than 20 times.

Huazhu, based in China and listed in New York, operates hotels using a franchise model and on leased properties, opens 1,000 hotels each year. The acquisition will add to its more than 5,000 hotels.

Deutsche Hospitality has plans to increase their number of hotels to 250 by 2024. “With the help of Huazhu that will go faster than 2024,” Huazhu Chief Executive Jenny Zhang told Reuters, adding that four of five Deutsche Hospitality brands will be rolled out in China.

No job cuts are planned as part of the deal, she said, adding that Huazhu does not expect to encounter any issues with antitrust regulators or German authorities overseeing foreign investments in the country.

Price: €700m

Price per Key: TBA

THPT Comment: Mega-deal to finish off the year? Never really understood why Travco changed the name to Deutsche Hospitality, which goes against Steigenberger’s growing global spread. We think Travco paid around €300m for Steigenberger in 2009.

First Seen: Reuters

The Hotel Property Team (THPT) is a small group of highly experienced business professionals. Between us, we provide a range of skills and experience which is directly relevant to those involved in the hotel property market.

For more information – Visit or email