Hanting Hotel, a budget hotel chain established by the founder of Ctrip and Home Inn Hotels & Management, has raised US$85 million from five venture capital firms for network expansion and brand development.
The funds included CDH Venture Partners, the former direct investment arm of China International Capital Corporation, IDG-Accel China Growth Fund, Chenwei Ventures, Northlight Venture Capital and Pinpoint Capital.
The firms bought 'more than a 20 per cent stake' in Hanting through their investments, said the hotel operator's chief executive Ji Qi. They have an option to buy a bigger stake in the future, said chief financial officer Lee Wang without giving details.
Budget hotels in the mainland have been popular with private investors, who expect good returns from the country's growing tourism industry and from the Beijing Olympics next year.
Major chain operators, such as Home Inn Hotels & Management and Shanghai Jinjiang International Hotels Development, made initial public offerings last year.
Motel 168 Chain Hotel, partly owned by Morgan Stanley, plans to list on the Nasdaq in the third quarter of this year, while US buyout firm Carlyle Group will invest up to US$100 million in Kaiyuan Group, a Hangzhou-based budget hotel chain, sources said.