Chinese Hotel Giant Eyes Foreign Deals as Global Brands Languish

The Shanghai-based and U.S.-listed Huazhu Group is keeping an eye out for foreign acquisition targets.

(Bloomberg)—China’s biggest hotel operator is looking to acquire foreign hospitality chains as the rapid recovery of the country’s domestic travel market puts it at an advantage to ailing global peers.

While major hotel brands like Marriott International Inc. and Hilton Worldwide International Inc. remain hobbled by the halt in travel amid a resurgence of infections in Europe and the U.S., Shanghai-based Huazhu Group Ltd.’s business has bounced back to pre-pandemic levels. In the second quarter, Huazhu’s occupancy rate reached 69%, compared to Hilton’s 22% and Marriott’s 14%.

With the virus largely eradicated in China, business travel has recovered and domestic leisure tourism is growing, buoyed by consumers voyaging locally since overseas vacations are near-impossible due to the government’s virus containment measures. China is the only major economy projected to grow in 2020, albeit at a slower pace than before, and this divergence with the rest of the world is starting to play out on the corporate landscape.

Traveling Chinese

While its global peers are cutting jobs and seeing revenue slide, the U.S.-listed Chinese operator has just raised HK$6.07 billion ($783 million) from a second listing in Hong Kong. It started trading on Nasdaq in 2010.

“We won’t hesitate to take action if there are proper acquisition targets, as operators with global presences will face challenges in the next one or two years amid virus and geopolitical tensions,” said group president Jin Hui, in a Bloomberg interview last week. “With capital raised from the IPO, we are able to seek partnerships at any level.”

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