The world's leading hotel companies and China's accommodation giants are forging closer ties, with several major announcements in just over a month. Jin Jiang and Starwood Capital recently agreed to buy Louvre Hotels. At the end of October, the Plateno group, which runs over a thousand 7 Days Inns budget hotels in China, signed a partnership agreement with Hilton Worldwide for the development of 400 mid-range Hampton by Hilton hotels. And now it is Accor's turn to reveal a major partnership with Huazhu, one of the big four in the Chinese hotel industry, along with Home Inns and the two groups mentioned above.
The world's thirteenth-largest hotel operator, this NASDAQ-listed company has almost 1,900 establishments, most of them under the budget brand Hanting Inns. At its head is chairman Qi Ji, a serial entrepreneur who founded Ctrip - the Chinese equivalent of Expedia - and then Home Inns, before creating Huazhu, also known as China Lodging. Above all, Huazhu is the fastest-growing group on the Chinese market (+54% between 2008 and 2013), compared with +28% for Jin Jiang and +36% for Home Inns over the same period. Huazhu also expects to open 500 new hotels, compared with just over 200 for each of its competitors.
"This is a great day for Accor. We have a shared desire to grow and to be the leaders in all our markets: Europe, Africa, Latin America, China and Asia", said a delighted Sébastien Bazin at the press conference announcing the partnership. After six months of discussions, the two parties have reached an extensive master franchise agreement and a highly ambitious development plan. At the same time, Accor will take a 10% stake in China Lodging. As part of this deal, Accor will entrust Huazhu with the management of its 100 existing hotels in China under the Ibis, Ibis Styles, Novotel, Mercure and Grand Mercure brands. The other part of this strategic partnership concerns development, where Huazhu intends to develop no fewer than 350 to 400 Accor hotels over five years under the Ibis, Novotel, Mercure and Grand Mercure brands.
Mercure Suzhou Hotel
"It's a challenge, yes, but it's achievable", explained Qi Ji when announcing the agreement. While the development of China's hotel industry has focused mainly on the economy and top-of-the-range segments, Huazhu's CEO sees considerable potential in the mid-range segment. In addition, China Lodging will also be interested in developing the Sofitel and Pullman brands by taking 10% of Accor's upscale and luxury business in China. Here too, exchanges between the development teams of the two groups should increase the growth potential of these brands.
This partnership does not stop at development alone, but also extends to the customer bases of the two groups. The agreement provides for the combination of loyalty programmes, with the 17 million members of the Accorhotels Club added to the 30 million members of the Huazhu Club. That's 47 million customers who will be able to spend and collect points in the 5,600 hotels and 670,000 rooms offered worldwide.
