Accor signs deal for China expansion
Accor has signed a strategic alliance with China Lodging Group in a move that is set to more than double the number of its hotels in the fast-growing Chinese market within five years.
The alliance will bring together the French hotel group’s brands, which include Ibis and Mercure, with China Lodging’s 1,900 existing hotels in China, the companies said on Sunday.
China Lodging, also known as Huazhu, said it would open between 350 and 400 new hotels under Accor’s budget and mid-scale brands in the coming years, significantly boosting the French group’s presence in the world’s most populous country.
Accor, the world’s sixth-biggest hotel group with 3,700 hotels in more than 90 countries, already has 144 hotels in China — about 100 of them in the budget and mid-scale categories.
In a statement, Sebastien Bazin, Accor’s chairman and chief executive officer, said that the alliance would “strengthen our leadership in the Chinese market over the long term”.
As part of the agreement, Accor’s economy and mid-scale hotels in China will become part of Huazhu, which will also become Accor’s master franchisee for the China region. In return, Accor will take a 10 per cent stake in the company as well as a seat on Huazhu’s board.
The two companies said that Huazhu would take a 10 per cent stake in Accor’s luxury and upscale hotels in China, though the Paris-based group will continue to own and develop them.
The two companies also said that they would link their loyalty programmes, giving members in each programme access to a global network of 5,600 hotels. Mr Bazin said that linking the programmes was “key to our digital transformation”.
The alliance caps a dynamic period in the year or so since Mr Bazin took over at Accor. First came the plan in November last year to turn his back on the “asset-light” model followed by so many of his competitors, which involves selling properties to concentrate on hotel management.
Then, in May, Accor announced that it had agreed to acquire close to 100 hotels in Germany, the Netherlands and Switzerland for €900m as part of a lease buyback programme to boost its real estate portfolio.
In October, the group said like-for-like revenue in the third quarter increased 4.6 per cent compared with a year ago to €1.5bn.