Accor and China Lodging form alliance for Chinese expansion

French hotel group Accor signed a strategic alliance with China Lodging Group as the company plans to double its number of China properties in five years.

Business Standard reported that that China Lodging, also known as Huazhu, will open between 350 and 400 new budget and mid-scale Accor properties in the coming years as part of the deal. The alliance is jointing Accor's brands with China Lodging's 1,900 hotels already under operation in China. Accor currently operates 3,700 hotels in over 90 countries, and already has 144 hotels in China.

As part of the agreement, Accor's economy and mid-scale hotels in China will become part of Huazhu, which will also act as Accor's master franchisee for the China region. In turn, Accor will take a 10 percent stake in the company, as well as a seat on Huazhu’s board.

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"China today is the largest outbound tourism market in the world; in that context, creating one of the largest hotel groups in China will lead to growth globally as those travelers come to recognize Accor and Huazhu's brands and expand their travel internationally." Sebastien Bazin, chief executive for Accor, told TTG Asia. Bazin also said that the impact on Accor's earnings per share would be "totally neutral in the first year and extremely positive afterwards."

"With an extensive brand portfolio, and strong distribution and loyalty platforms, Accor and Huzahu share a lot of common values," Ji Qi, chairman and CEO of Huzahu Hotels Group, said in a statement. "By combining forces we can facilitate growth and attract more customers to the expanded network.”

Reuters reported that the deal was signed for $160 million, and that as part of the deal both companies will link loyalty programs, reaching a combined market of 47 million across 5,600 hotels internationally.

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