Earlier this year, Chinese firm HNA Group announced it will acquire a stake in the European hotel chain NH Hoteles SA, giving it access to the mid-range hotel market in the continent. With 20 per cent ownership of the organisation, HNA Group will become a strategic shareholder, which could have many benefits for its other businesses. Editor-in-chief of HOTELS magazine Jeff Weinstein explained that the Chinese company saw an opening - because NH Hoteles needed capital investment - and took it.
"This is specifically interesting as outbound Chinese travellers discover markets like Spain. HNA can capitalise on this sales opportunity by marketing its airline brand and its new hotel brand affiliation with NH," he stated. Mr Weinstein added that the hotel industry in Europe is ripe for investment from overseas, because stock in the sector is "potentially available at a great discount to replacement cost", making such assets an attractive long-term investment. Meanwhile, this deal has advantages for NH Hoteles, too. HNA is reportedly planning to expand the hotel chain in China, developing a network of four-star accommodation providers across the nation.
According to figures published by BNP Paribas Real Estate, hotel investment volumes across Europe increased by 29 per cent during the first half of 2011, compared to the same six months in 2010. The UK saw the lion's share of the money ploughed into the sector during this period, with transactions in the nation accounting for 42 per cent of the total amount invested. In addition, the firm noted that foreign buyers dominated the marketplace, with many looking for "high-profile trophy assets or distressed sales".
Jones Lang LaSalle Hotels recently released its Hotel Investor Sentiment Survey, which found investors have turned firmly towards a buy mentality. The research also revealed that there is greater confidence in the performance of assets in western European locations, as opposed to those situated in the east of the continent. Mark Wynne-Smith, chief executive officer of Jones Lang LaSalle Hotels, commented: "The return of buy intentions on the top of investors' strategy lists indicates a potential turning point for the hotel investment market as it coincides with a marked increase in the number of hotels available for sale."
- Thursday 01 December 2011