Hilton Grows in China With Re-brand of Country Garden Hotels
Date: June 2018
Location: China
Name: Change Country Brand hotels to DoubleTree by Hilton and Hilton Garden Inn
Owner: Hilton has signed a deal with China-based developer Country Garden (China Lodging – Huazhu Hotels) to manage a number of properties in China under its brands.
The partnership saw an initial six hotels owned by Country Garden converted to Hilton-branded properties or in the pipeline. Country Garden has an existing portfolio of over 120 hotels in trading, under construction, and planning.
“Country Garden is a widely admired property developer and we are thrilled to be extending our partnership with them,” said Hilton president & CEO Chris Nassetta. “Ultimately, our goal is to provide exceptional experiences to our guests wherever they may be, and through this partnership, we have an opportunity to bring Hilton’s signature hospitality to even more locations across the country.”
New hotels included in the partnership deal include DoubleTree by Hilton Hainan Lingshui; DoubleTree by Hilton Guangzhou Zengcheng; and Hilton Zhengzhou Xingyang.
Hilton currently has 470 hotels either trading or under development in China, with 266 under construction.
The deal came one month after Country Garden Holdings acquired a residential site in London, for around GBP80m, with plans to turn it into a GBP400m development of 785 homes.
The move, the first foray for the group into London, was described by one executive as expected to offset disappointing sales at a project in Malaysia which had failed to sell to Chinese buyers as anticipated.
Commenting to the South China Morning Post, they said: “The purchase [in London] is financed overseas so it totally complies with state policies.
Unlike the previous Malaysia project which mainly targeted Chinese, this project will target locals.”
The group previously branded hotels under its own Country Garden flag, with its open hotel portfolio dominated by five-star properties. The deal with Hilton came as the country’s market turned to towards the mid market.
The group is also looking to expand across the hospitality sector as the growth in branded hotels in the country slowed.
CEO Jenny Zhang described the domestic travel market in China as “very strong”, commenting: “From 2011 to 2016, disposable income per capita grew at CAGR of 7% while domestic travel expenditures grew at 14% CAGR. The strong demand for travel has been driven by consumption upgrades and lifestyle change.”
HA Perspective [by Katherine Doggrell]: The turn towards the mid-market in China by China Lodging has been a familiar topic in these pages over the past year and the global brands have shown a similar interest, eager to join in the shift as the gap between economy and luxury gets coloured in.
But, as is the wont of the brands, the urge to lay out their own cash was limited and there has been a hustle to find local partners. In Country Garden Hilton has found one which is eager for a little light diversification from its core residential business, and also from the luxury market.
THPT Comment: Interesting to note this expansion into mid-scale hotels from just the luxury end. China Lodging announced last year that two thirds of the group’s pipeline was in the mid-scale and upscale segments. The company said that, within China, there were seven brands with more than 100 hotels in the mid-scale segment, with its having three, in the form of Ji Hotel, Orange and Starway. It expected HanTing Plus to pass the 100 mark in just under two years.
First Seen: Hotel Analyst