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.
