China’s Huazhu Group agrees to acquire Deutsche Hospitality for $780m

5th November 2019 (Last Updated November 5th, 2019 14:29)

China-based hotel operator and franchisor Huazhu Group, through its subsidiary China Lodging Holding Singapore, has agreed to buy Germany-based Steigenberger Hotels Aktiengesellschaft (Deutsche Hospitality) for around $780m in cash.

China’s Huazhu Group agrees to acquire Deutsche Hospitality for $780m
Huazhu Hotels Group headquarters in Shanghai, China. Credit: WhisperToMe

China-based hotel operator and franchisor Huazhu Group, through its subsidiary China Lodging Holding Singapore, has agreed to buy Germany-based Steigenberger Hotels Aktiengesellschaft (Deutsche Hospitality) for around $780m in cash.

Huazhu is acquiring Steigenberger Hotels Aktiengesellschaft from Egyptian travel and tourism company Travco Group, which bought the German hotel firm from the Steigenberger family in 2009.

Subject to regulatory approvals, the deal is expected to complete by early 2020.

Huazhu Group is eyeing to expand its international footprint with the addition of the upmarket hotel chain. Based in China, and listed in New York, Huazhu Group opens around 1,000 hotels annually, either through leased, manachised or franchised models.

As of 30 September this year, Huazhu operated 5,151 hotels with 504,414 rooms.

Its brands include Hi Inn, HanTing Premium Hotel, Elan Hotel, HanTing Hotel, Orange Hotel Select, JI Hotel, Starway Hotel, Crystal Orange Hotel, Manxin Hotels & Resorts, Joya Hotel, and Blossom Hill Hotels & Resorts.

It is also a master franchisee for Mercure, Ibis and Ibis Styles, and has co-development rights for Novotel and Grand Mercure in China.

Deutsche Hospitality operates brands such as Steigenberger Hotels & Resorts, Zleep Hotels, MAXX by Steigenberger, IntercityHotel, and Jaz in the City.

It operates 118 hotels and has 36 hotels under development. It intends to increase the current count of its hotels to 250 by 2024.

Huazhu Group founder and executive chairman Qi Ji said: “This acquisition is an important milestone in our global growth strategy. Deutsche Hospitality is a perfect strategic fit and we expect competitive advantages for both companies. The brands of Deutsche Hospitality will enhance the offering of Huazhu and its operating capabilities in the high-end European hotel market.”

Huazhu plans to launch four out of five brands of Deutsche Hospitality in China.

Deutsche Hospitality executive board stated: “Huazhu is one of the fastest-growing hotel companies in the world. We share the same values as Huazhu. We are both truly passionate about offering a high-quality experience to our customers, hence we are constantly aiming for improving our offering and services and innovating our operations. Both Huazhu and Deutsche Hospitality have strong and recognized brands, which we will maintain, while further accelerating their growth. We are very excited to become part of Huazhu Group.”

Meanwhile, Deutsche Hospitality’s joint venture in the Middle East will remain unchanged under its current ownership.