Shanghai Jin Jiang International Hotel Group and Plateno Hotel Group are discussing arrangements for a merger that would create a Chinese powerhouse with global ambitions—and Starwood Hotels & Resorts Worldwide as its likely next acquisition target.
Jin Jiang is planning to purchase 80 percent of Plateno’s shares and the two groups will continue to operate independently, according to a report in Chinese-language business and finance website Jiemian News.
As of the end of 2014, Jin Jiang owned 177,000 rooms and Plateno 298,000 rooms. The merger, if completed, will result in a Chinese hotel group boasting a total of 450,000 rooms. Domestic implications aside, the move appears to be a possible first step in the formation of the first Chinese-owned global hotel group.
Jin Jiang Group has previously been in discussions to acquire Starwood Hotels and Resorts, according to a Jiemian industry source who added that once the merger with Plateno is completed, the new group will look into purchasing Starwood.
“Jin Jiang has been interested in Starwood for some time now,” he said.
In late April of this year, Starwood announced that it had retained investment bank Lazard to help it “explore a full range of strategic and financial alternatives to increase shareholder value,” with chairman Bruce Duncan telling analysts that “no option is off the table”. This year Starwood’s Q1 net income totaled $99 million, a year-on-year decrease of 27.7 percent.
Jiemian News’ source noted, Jin Jiang is likely to take a slow approach to acquiring Starwood after the completion of the Plateno share acquisition, which is still not a done deal.
What We Know Now
What can be confirmed at this point in time is that China’s largest hotel groups are looking to tap into the outbound Chinese tourism market, the world’s largest in terms of both traveler numbers as well as spending.
When Jin Jiang announced its acquisition of Groupe du Louvre last November it cited the outbound Chinese market as well as a desire to enter the international market in general as the driving force behind the deal.
In March of this year at Plateno’s 10-anniversary celebration, Plateno Chief Brand Architect Alex Zheng said that in the coming decade the company intends to become a global player of unrivaled scale. Its high-end Portofino brand has recently announced plans to establish properties in the Maldives and the Philippines – part of a longer-term push into Asia, Europe and Australia. The group’s new brand H12 is also planning on opening 30 hotels worldwide in the coming five years.
Plateno announced on June 23 that it was preparing for a domestic IPO on China’s A-share market, but recent market woes have delayed that plan. It is now focusing on a series of structural adjustments and brand integration. Watch this space.