Accor on Monday announced it has taken a 10% share in Huazhu Hotels Group (also known as China Lodging Group) with plans to create a company in China with more than 2,000 hotels and a pipeline of more than 500 hotels. The alliance is expected to further accelerate development to new levels and see faster expansion of both company’s brands in China.
The agreement dictates that Accor’s economy and midscale platform in China will become part of Huazhu. Under the arrangement, Huazhu will become Accor’s exclusive master-franchisee operating and developing in Mainland China, Mongolia and Taiwan for the economy (ibis, ibis Styles,) and midscale segments (Novotel and Mercure), as well as the upscale Grand Mercure brand. Huazhu plans to open 350 to 400 new hotels under the Accor brands in the next five years.
Accor will continue to lead the ownership and development of all its luxury and other upscale brands in China with Huazhu becoming a minority shareholder (10%) in Accor’s luxury and upscale business in China. The intent is to have Huazhu help support future development of these Accor brands in China due to its relationships with key Chinese real estate investors.
All Accor’s existing hotels in China will continue to be operated under their current international brand standards and will add the support of Huazhu’s networks and domestic reputation. They will maintain their identities, specificities and international standards, while adding Huazhu’s on-the-ground support capabilities and local expertise.
The agreement will offer the customers of both loyalty programs (together 47 million card holders) the opportunity to access a network of over 5,600 hotels globally.
Huazhu has a portfolio of over 1,900 hotels and has brands up and down the spectrum, ranging from upscale (Joya, Manxin) to midscale (JI Hotels, Starway) and economy (Hanting, Elan and Hi Inn).
Accor currently has 144 hotels in China across eight brands.
“China is today 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,” said Accor Chairman and CEO Sebastien Bazin. “This agreement will also help us better anticipate customers’ expectations and strengthen our leadership in the Chinese market over the long term.”