NH Hotel Group, Madrid, has signed a memorandum of understanding with China’s HNA Group Co. for the joint management of a significant portfolio of HNA and third-party hotels in the middle and upper-middle segments in China, Hong Kong, Taiwan and Macao.
HNA-NH Hotel Management Joint Venture Co. in Beijing will initially assume management of six of the Chinese group’s hotels, encompassing 1,312 rooms, which are operated under various HNA trademarks.
The joint venture, which would be 49%- and 51%-owned by NH and HNA, respectively, would be incorporated with initial share capital of US$20 million, out of which NH would provide US$4.9 million at the time of incorporation. If necessary, and so agreed, NH would make a second capital injection of the exact same amount in two years.
The new company also will develop a strategic plan and design a prototype for tackling hotel growth in China under the NH brand, which currently operates around 400 hotels and 60,000 rooms in 28 countries.
This agreement comes after a 2013 deal between the two companies in which HNA took a €234 million (US$306 million) equity interest in what was a debt-laden NH Hotel Group, becoming its largest shareholder.
As part of the bilateral trade summit underway between Spain and China, Spanish President Mariano Rajoy and his Chinese counterpart Li Keqiang presided over execution of the MOU.
NH Hotel Group CEO Federico González Tejera said, “I’m fully convinced of the positive impact and benefits of leveraging the synergies between the two companies, such as the chance for NH to get its feet wet in one of the world’s biggest markets without getting distracted from its current overriding strategic targets.”