DAWN
GLOBAL UPDATE
OF A NEW
Dalian Wanda
Group is investing more than US $ 1 billion in a mixed-used
London development that includes a 160-room hotel it is branding .
ERA
UPDATES
GROUPE GERMAIN ’ S GROWING BRANDS 10
THE TRUE VALUE OF PINTEREST 12
HANDS-ON CSR IN THAILAND 12
ISRAEL PLUGS ON 14
ON THE WEB 18
The global hotel industry has been focused for years on what is going into Mainland China as the big brands jostle to expand there . Now it should heed what is coming out .
Mainland Chinese conglomerates are investing in Western hotel companies , and developers are investing in hotel properties worldwide — according to Asia Society , 2013 is expected to see record investments in U . S . commercial real estate from China . At the same time , Mainland Chinese domestic brands are popping up abroad . The overall impact is only starting to be felt .
“ Given the size of China , over the next 10 years we expect to see a significant share of hotels in international gateway cities under Chinese ownership that will likely be partially proportionate to the level of visitation by Chinese ,” says Daniel Voelim , managing director , HVS Hong Kong . “ My estimate will be 5 % to 15 % in key destinations for Chinese leisure and business travelers in Asia Pacific and up to 10 % in other key markets globally . We are only seeing the beginning of this trend .”
Financing deals is not a challenge for these Chinese companies as they typically have strong balance sheets and are able to draw on domestic and local debt to fund their expansion .
Like the Japanese 25 years ago , Mainland Chinese investors are pumping billions into foreign real estate investments despite challenging capital flow restrictions on outbound investments . Chinese companies are investing in mixed-use developments that include a hotel component , a trend likely to continue for the near future . “ Chinese groups develop hotels not for standalone financial returns but as a component of a mixed-use project to add an amenity ,” says Nigel Summers , director of HTL Horwath , Hong Kong .
A recent example of this is the US $ 1 billion investment announced in June by the privately held Dalian Wanda Group , Dalian , China , to develop and brand a 160-room , 5-star hotel in London with Green Property .
Analysts say these investments are likely to be more long-term than that of private equity companies as the goal of the Chinese developers is to diversify their holdings in more mature markets so their portfolios are less susceptible to price or rate movements .
The investments in Western hotel companies are coming from both large statecontrolled and privately held companies . Shanghai Jin Jiang International Hotel Group Co ., Shanghai , was an early example of this with its 2010 joint venture with Thayer Lodging , Annapolis , Maryland ,
8 HOTELS September 2013 www . hotelsmag . com