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China’s HNA moves into the U.S. with Carlson acquisition

The Carlson family’s long run in the hotel industry appears to be heading toward an end as on late Wednesday it was announced that HNA Tourism Group Co., Beijing, has entered into an agreement to acquire the Carlson Hospitality Group, Minnetonka, Minnesota, for an undisclosed sum. It was previously reported that Carlson could sell for about US$2 billion.

The deal, expected to close in the second half of 2016, includes the acquisition of Carlson Hotels Inc., which owns the Quorvus Collection, Radisson Blu, Radisson, Radisson Red, Park Plaza, Park Inn by Radisson, Country Inns & Suites By Carlson brands and the Club Carlson global hotel rewards program. “The great news is the legacy of brands will continue,” Carlson Hospitality Group CEO David Berg told HOTELS on Thursday. “Radisson and Country Inns & Suites, particularly in the Americas, have significant runways ahead and maybe there will be opportunities as Starwood-Marriott shakes with properties becoming available that are interesting for those brands. Also, the millennial-minded traveler is moving toward upscale select-service model and Red is a unique opportunity that we are excited to have capital to accelerate its growth, as well.”

HNA, a Fortune 500 company with multiple businesses in China, also acquires in the deal a 51.3% majority stake in Rezidor Hotel Group AB, Carlson’s master licensee based in Brussels, with hotels in Europe, the Middle East and Africa. Since the closing will result in an indirect change of control in Rezidor, HNA Tourism Group would, under Swedish takeover rules, be obliged to launch a mandatory public tender offer for the remaining 48.7% of Rezidor within four weeks after the closing if the ownership in Rezidor is not sold down below 30%.

More details about the deal, including HNA intentions for the future, can be found on a new website dedicated to explaining the deal.

Founded in 2007, HNA’s Tourism Group is already the largest shareholder in NH Hoteles in Spain, as well as Spokane, Washington-based Red Lion Hotels. By adding the Carlson brands it will be interesting to see how HNA manages its expanded portfolio. “I don’t think they are afraid to think about where it makes sense to get scale,” said Berg, who is expected to remain the company’s CEO.

Carlson Hotels, whether or not it changes its corporate name, will remain based in Minnetonka and with new ownership the goal is to accelerate growth in the brands by investing in assets in major gateways. “HNA has been very clear throughout process they want to be a leading global hotel company and understand they need to invest in infrastructure and also recognize from time to time they need to put their balance sheet to work owning assets,” Berg said. “As I think about key gateways in Asia Pacific that is something we haven’t been able or willing to do given our capital light model, and now we have some opportunities with HNA. The new and significant infrastructure gives us a platform to think about other opportunities to add into the fold.”

Bai Haibo, chairman and CEO, HNA Hospitality Group, and David Berg, CEO, Carlson Hospitality Group, shake hands over the new deal. Witness leaders (l. to r.): Chen Wenli, vice chairman, HNA Group; Wang Jian, chairman, HNA Group*; Diana Nelson, chair, Carlson; Cheng Feng, chairman of board member, HNA Group*; Tan Xiangdong, CEO, HNA Group; Li Tie, CEO, HNA Tourism Group. *not visible
Bai Haibo, chairman and CEO, HNA Hospitality Group, and David Berg, CEO, Carlson Hospitality Group, shake hands over the new deal. Witness leaders (l. to r.): Chen Wenli, vice chairman, HNA Group; Wang Jian, chairman, HNA Group*; Diana Nelson, chair, Carlson; Cheng Feng, chairman of board member, HNA Group*; Tan Xiangdong, CEO, HNA Group; Li Tie, CEO, HNA Tourism Group. *not visible

In a statement, Berg said, “We look forward to working within HNA Tourism Group, a greatly respected global enterprise, in what will be an exciting new chapter in the history of Carlson Hotels. As part of HNA Tourism Group, Carlson Hotels will have an opportunity to advance our commitment to providing guests with hospitality worldwide.”

Diana Nelson, Carlson board chair, added, “Since my grandfather, Curt Carlson, founded our company in 1938, our family has run businesses that create opportunity for people and positive change in the world. Hospitality is in our hearts, which made this a difficult decision. We strongly believe that selling our hotel business to HNA Tourism Group, a company that fully recognizes its value and heritage, is the best way for us to position it for success and to be true to my grandfather’s legacy in the long term.”

“Carlson Hotels’ global success and strong, sustainable growth potential is a testament to their world-class brands, continuous innovation, excellent management, and unique employee-focused culture, all of which we will build upon as part of this combination to establish our presence in the U.S. market and expand our footprint in hospitality internationally,” said Bai Haibo, HNA Tourism Group board member and HNA Hospitality Group chairman and CEO. “We look forward to working together with their management team, employees, franchisee partners, suppliers and customers to accelerate growth by investing substantially in the business.”

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