The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.
Jin Jiang looks to US and Europe
The owner of the landmark Fairmont Peace Hotel in Shanghai plans to flex its muscles outside the mainland with acquisitions in the United States and Europe.
Shanghai Jin Jiang International Hotels (Group), whose 707-strong portfolio in China generated an 81.5 per cent jump in operating profit to 552.39 million yuan (HK$654.82 million) last year, plans to expand overseas as a growing number of mainland tourists travel to the West.
Through the group's acquisition of its first overseas asset a year ago, the United States' largest independent hotel management group Interstate Hotels & Resorts (IHR), Jin Jiang planned to gain access to new markets such as India and Russia, managing director Chen Hao said. 'The IHR deal was like testing the waters,' he said yesterday. 'We are interested in the US and Europe markets.'
Jin Jiang teamed up with US property investment firm, Thayer Group, and each of them bought a 50 per cent stake in IHR for a combined US$75.3 million.
IHR, which manages 311 hotels in the US, England, Canada, Russia and India, was on track to returning to profit this year from a US$15.56 million loss last year as it had obtained 65 management contracts in February and restructured its debts, Chen said.
Jin Jiang shared US$2.3 million of the loss last year.
Overseas revenue accounted for 30 per cent of Jin Jiang's total, at 6.52 billion yuan. The total revenue almost doubled from 3.32 billion yuan in 2009, largely driven by higher demand for the group's star-rated and budget hotels.
In Shanghai, its hometown, Jin Jiang expected the hospitality market to take 'a while' for the oversupply situation to settle following the conclusion of the World Expo in October, said the group's managing director and chief executive, Yang Weimin.
Tourists continued to pour into Shanghai even after the World Expo.
The group's flagship Fairmont Peace Hotel on the Bund was still charging at least 2,000 yuan per room night, compared with 700-1,200 yuan per room night before the renovation was completed in July, Yang said.
He said the group was pressing ahead with a plan to have 1,000 budget hotels, compared with 596 as of the end of last year.
Jin Jiang shares rose 3 HK cents, or 1.81 per cent, to finish at HK$1.68 yesterday.
Jin Jiang and the Thayer Group each bought a 50 per cent stake in IHR for this amount in US dollars: $75.3m