Suitor for Spain's NH Hotels potentially vexing for China's HNA Group

Barceló Hotels and Resorts signs with SiteMinder
The Barceló Emperatriz in Madrid

Spanish hotel company Barcelo Hotels is reportedly eyeing a takeover of its domestic competitor NH Hotel Group, and has tapped Santander Bank to examine options. The acquisition could make the company one of Spain’s biggest hotel chains. 

This is only the latest twist in an impressively convoluted saga of hospitality and investment and shareholder infighting. It could also pose a challenge to China's HNA Group, which has been on a hospitality spending spree for that last several years, but one that may now be curtailed by Chinese government regulators.

HNA's Hospitality Growth

HNA comes from a tourism background—perhaps a reason why many of its recent acquisitions have been in the hospitality space. Last year, HNA acquired Carlson Hotels, and subsequently tapped Federico González Tejera, the former CEO of NH Hotel Group to lead the company, replacing then-CEO David Berg. HNA choosing Tejera to run Carlson was not by chance: HNA owns 30 percent of NH, which resulted in shareholder strife over what some perceived as a conflict of interest over HNA owning both companies. When Tejera was ousted at NH, HNA called the move "reckless" and "punitive." HNA filed a lawsuit last September asking for the decision to be reversed, but a Madrid court dismissed the claim on Tuesday—paving the way for Barcelo to step in and swoop NH up.

González Tejera, meanwhile, was later promoted to president & CEO of Rezidor in May, succeeding Wolfgang M. Neumann. 

HNA also bought a 25-percent stake in Hilton from the Blackstone Group last year—an investment that Adam Tan, vice chairman and CEO of HNA Group, referred to as "consistent with our strategy to enhance our global tourism business." Beyond Hilton, Carlson and NH, HNA also owns 15 percent of Red Lion Hotels Corp., and before that made an ultimately ill-fated play for Amanresorts

But the international wheeling and dealing may be over. Last month, China formally implemented measures to limit and restrict what it calls extensive overseas investments made by domestic groups. China's State Council has released a guideline "to promote healthy growth of overseas investment and prevent risks." Sectors on the restriction list include real estate, hotels, entertainment, sport clubs, outdated industries and projects in countries with no diplomatic relations with China. These restrictions could also make it easier for 

Meanwhile, HNA’s biggest (nominal) shareholder has released a video defending himself against accusations of corruption. The identity of Guan Jun—and how he came to hold such a large stake in a large firm—is largely a mystery even in his own country, according to the Financial Times. HNA executives had previously explained to the Financial Times that the large shareholding was simply held in Guan’s name but in fact represented the interests of HNA insiders. HNA executives have denied to the site that Guan "is or ever was a manager for the company," as some have speculated. 

Investing in Spain

Barcelo has good reason to be interested in NH Hotel Group, especially its properties in Spain. The group described Spain as having performed “excellently throughout the first half, boosted by business dynamism in cities such as Madrid and Barcelona”, where revenue rose by 12.5 percent and 11.1 percent respectively, with the secondary cities showing an increase of 10.2 percent.

While neither Barcelo, NH or Santander had officially commented as of late Wednesday afternoon, sources claimed that shareholders of the companies were talking unofficially. 

Barcelo Hotel Group has more than 100 hotels in 20 countries, and nearly half of those hotels are in Spain. NH Hotel Group, meanwhile, operates close to 400 hotels in 30 markets across Europe, the Americas, Africa and Asia. With Spain's hospitality sector going strong, there is no question why any global investor would want in.