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Mergers & Acquisitions

Owner of Hilton hotels, Hainan Air spends US$7.6 billion assembling online tour business

The high-flying Chinese group, which also owns a stake in Hilton hotels, has launched an app that could potentially challenge China’s dominant online tour operator Ctrip.com

PUBLISHED : Wednesday, 18 October, 2017, 10:04am
UPDATED : Wednesday, 18 October, 2017, 11:56pm

HNA Group will invest 50 billion yuan (US$7.6 billion) to cobble together its range of leisure-related businesses from its 25 per cent stake in the Hilton Hotels Group to China’s fourth-largest airline fleet into an digital operation, a move that could put it in place to take on the dominant online travel agent Ctrip.com International.

The company introduced a new app called HiApp on Tuesday in Beijing. The platform, based on cloud computing technology, will collect high-quality, local and cost effective airline and tourism products globally to make tourists travelling overseas feel at home. The company also said that it will create a “shared platform” for users to exchange tourism resources based on technologies including artificial intelligence, mapping and big data.

Shares of Ctrip fell as much as 2.2 per cent overnight in New York, their biggest intraday decline in five days, to US$54.24. Shares of HNA’s stable of companies rose in Hong Kong and China trading. HNA Holding Group, the holding company and manager of HNA’s hotels and golf courses, rose as much as 5.5 per cent to HK$0.385 in Hong Kong, while the group’s carrier Hainan Airlines Holding rose as much as 0.3 per cent to 3.27 yuan in Shanghai.

The company, founded by Chen Feng, provided scant details on new app. The company did not say what kind of specific service it could provide to challenge other online tourism operators. But it said the new investment will be the start of a “comprehensive transformation” for HNA, which has actively “responded to the call of national strategies, and in line with the demand of a new era”.

HNA, which grew out of a regional airline based in southern China’s Hainan province, has spent an estimated US$50 billion over two years, acquiring a string of assets from Hilton hotels to Hong Kong’s most expensive residential land parcels to a stake in Deutsche Bank.

Its airlines business is led by its flagship Hainan Airlines, as well as its control of Avalon Holdings, one of the largest leaser of commercial aircraft. HNA also controls Hong Kong Airlines, based in the city.

HNA was among several asset acquirers that had been placed under close scrutiny by the Chinese government for their aggressive offshore shopping spree. The China Banking Regulatory Commission in June ordered banks to check their exposures to these asset buyers, including HNA.

On October 11, China’s insurance regulator banned Bohai Life Insurance, an insurance unit under the HNA group, from providing “financial aid in any form” to the parent, after Bohai was found having problems managing shareholder and related party transactions, a move seen as another regulatory tightening up for HNA.

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