image

Mergers & Acquisitions

Radisson hotel chain sees bright future under China’s HNA

Hotel operator Carlson-Rezidor welcomes the aviation and shipping conglomerate’s ambitions and financial strength

PUBLISHED : Sunday, 23 October, 2016, 9:57pm
UPDATED : Sunday, 23 October, 2016, 9:57pm

The owner of the Radisson hotel chain, which is being bought by Chinese aviation and shipping conglomerate HNA Group, expects to see a boost to its long-term prospects thanks to the financial muscle of its new owner.

In April a unit of HNA Group said it planned to buy US-based Carlson for an undisclosed amount, a deal that would also include the hotel giant’s major stake in Stockholm-listed Rezidor Hotel Group.

“We are very excited about this new investor. They are a Fortune 500 company with very ambitious long-term growth strategies,” said Thorsten Kirschke, Asia Pacific president of Carlson-Rezidor, which operates 1,400 hotels worldwide under brands such as Radisson and Country Inns & Suites.

“What can be better than being part of something that has both the ambitions and financial strength to succeed?” said the 52-year-old hospitality industry veteran who joined Brussels-based Rezidor Hotel Group in 1995.

We are very excited about this new investor. They are a Fortune 500 company with very ambitious long-term growth strategies
Thorsten Kirschke, Asia Pacific president, Carlson-Rezidor

Headquartered in Hainan, a scenic island dubbed China’s Hawaii, HNA started business solely as an airline but later branched out to industries spanning tourism and real estate to retail and shipping.

In 2015 it recorded revenues of 600 billion yuan and boasted nearly 200,000 employees, according to its website.

The conglomerate, controlled by billionaire tycoon Chen Feng, made global headlines after snapping up a flurry of overseas aviation and hospitality assets over the last three years, including its multibillion dollar acquisitions of global airport luggage handler Swissport and Spain’s NH Hotels.

Before moving to Singapore in 2014 to head the hotel group’s Asia Pacific arm, Kirschke was in charge of the hotel chain’s Americas business. He was also chief operation officer of the global business.

With a long-lasting tourist boom fuelled by the prosperity of Chinese consumers, multinational hotel chains such as Hilton Worldwide and InterContinental Hotels Group have scrambled to make inroads into China, adding more hotels on the mainland than most other parts of Asia.

Comparing the trend to a “gold rush,” Kirschke pointed out that Carlson Rezidor’s newly-launched Radisson Red brand hotels, aimed at the millennial generation of holidaymakers, are distributed evenly across three continents.

World Youth Student and Educational Travel Confederation data forecasts that by 2020 youth travellers will make 320 million international trips annually, up 47 per cent from 217 million in 2013.

Unlike their parents, Kirschke said young and affluent travellers are looking for more flexible and communal use of space as well as technology-driven services at hotels.

“Young people are much more about independence and DIY,” he said. “For example, a doorman or concierge are no longer needed.”

The different needs of young travellers also prompted the hotel chain to refrain from installing desks in Radisson Red guest rooms, adding a kitchen or picnic table instead. “Young people would be in the lobby working with their laptops and other electronics, while older generation guests would sit in the room facing the wall,” the hotelier said.

In China, Carlson has inked contracts to open its Radisson Red hotels in Shenyang and Guangzhou and is in advanced talks on similar deals in Shanghai, Beijing and the southwestern municipality of Chongqing. “In five years we want to have a presence in all first tier cities, and penetration in second tier cities,” Kirschke said, adding that there could be hundreds more hotels in China given the strong demand.

Despite the high hopes Carlson has pinned on China, it remains to be seen what HNA, co-founded in 1995 between the government and current chairman Chen, will have to offer the 75-year-old multinational hotel chain, as the deal has yet to be completed.

The pending acquisition has already triggered chaos in the boardroom of its Spanish rival NH, which in late June ousted one of its co-chairmen and three other board members appointed by the company’s largest stakeholder, HNA, over a potential “conflict of interest”.

Almost 60 per cent of NH’s shareholders approved a motion at its annual meeting in Madrid to force out the HNA-appointed board members because of the Chinese conglomerate’s planned takeover of competitor Carlson.

business-article-page