China Postal's sale of hotels expected to lure foreigners
State-owned China Postal Group, as part of its restructuring, has put up 30 mid-tier hotels and resorts for sale in a rare disposal in the sector that is expected to arouse keen interest from foreign institutional investors and domestic hospitality firms.
The small two- to four-star hotels and resorts offered for sale are scattered around mainland tourist spots including those in Beijing, Tibet, Gansu, Jiangsu and Sichuan, with some of the properties more than 20 years old and out of business, said online auction platform Shanghai United Assets and Equity Exchange, which is handling the sale.
A potential hurdle for foreign firms are the restrictions unveiled yesterday by Beijing on foreigners investing in real estate in its latest efforts to cool the sizzling market.
Consultants and analysts widely believe that a potential buyer might be found among institutional investors active in the mainland's property market, such as Morgan Stanley, Citigroup and H&Q.
'What these foreign investors are interested in in China is property,' said Scott Brooks, managing director at hotel investment adviser TransACT Asia.
They were expected to cross swords with two rapidly growing Shanghai-based hoteliers, Shanghai Jin Jiang International Hotels (Group), which owns the city's iconic Peace Hotel, and Motel 168 Chain Hotel, a joint venture between Morgan Stanley and restaurant and hotel management group Merrylin.
Acquiring the portfolio would provide a shortcut in their battle to increase their market share in the undertapped budget hotel segment, said USB analyst Eric Wong.
'The properties could be used for redevelopment depending on size of the sites or rebranded as part of their chains,' he said.
Going public in December, Jin Jiang earmarked half of its HK$2 billion listing proceeds for increasing the number of its budget hotels from 110 in 2005 to 180 at the end of last year and 600 by 2010 through direct investment and franchising.
Rival Motel 168 is planning a US$100 million listing on the Nasdaq later this year to fund its expansion in the budget hotels segment.
Morgan Stanley and Jin Jiang declined to comment yesterday.
China Postal Group, a money-making division of the postal bureau involved in a slew of diverse businesses, has been restructuring, in line with other state-owned conglomerates.
This week, the bureau span off its deposit service to create the country's fifth-largest bank.
