Jinjiang to sell shares to Starwood
Hotel operator to sell 10pc of US$300m Hong Kong flotation to the US giant
Jinjiang International Hotels Development, China’s largest hotel operator, plans to sell about 10 per cent of its US$300 million Hong Kong initial public offering to the parent of Starwood Hotels & Resorts, the third-largest hotel operator in the United States, market sources said.
Starwood, whose hotel chains include Luxury Collection, Sheraton, St Regis and Westin, operates 28 hotels in the mainland, Taiwan and Macau and has another 28 hotels under construction.
Its parent, the buyout fund Starwood Capital Group, was founded by Barry Sternlicht, who also started Starwood Hotels.
Other potential investors in Jinjiang’s share offering are Bank of China Group, parent of investment bank BOC International, which plans to commit US$20 million and David Li Kwok-po, the chairman of Bank of East Asia, who would spend US$10 million, sources said.
Jinjiang begins talking price with investors today and its shares are due to begin trading in Hong Kong in the middle of next month.
BNP and UBS are arranging the sale.
Jinjiang’s best-known property, the century-old Peace Hotel in the heart of Shanghai’s Bund district, will be included in the listed company along with 260 other three- to five-star hotels.
The hotels are located in cities including Beijing and Shanghai and in Zhejiang and Jiangsu provinces. The company’s three-star hotels, which use the brand name Jinjiang Inn, constitute the mainland’s largest budget hotel chain.
Shares of rival Home Inns and Hotel Management, which operates China’s second-largest budget hotel chain, soared 63 per cent on their first day of trading on the US Nasdaq market last month. The shares traded at US$30.49 on Friday, just over twice their IPO price of US$13.80.
Jinjiang plans to open a further 16 hotels and inns by the end of 2008.
It also operates a travel agency, fast-food outlets and a taxi-leasing service. Its net income rose 13 per cent to 98 million yuan in the first half of the year on sales of 466 million yuan.
The company has held talks about a strategic investment with international hoteliers including Fairmont Hotels and Resorts, a Canadian operator, according to market sources.
Fairmont, which does not yet have a presence in China, was bought this year by Saudi Arabia’s Prince Alwaleed bin Talal and private equity firm Colony Capital. Colony owns the Raffles brand and operates one hotel in Beijing.
China’s travel industry is projected to grow 23 per cent to US$301 billion by year’s end, according to the World Travel & Tourism Council. That would make it the third-largest market in the world behind the US and Japan.
The mainland, which attracted a record 120 million foreign tourists last year, now ranks fourth among the world’s travel destinations. Foreign visitors spent US$29 billion in China while mainland travellers spent US$67 billion.
Source: South China Morning Post
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