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Huazhu Group Plans Secondary Listing in Hong Kong

Huazhu Group Ltd., the only Chinese hospitality conglomerate listed on NASDAQ, is looking to shore up the home market in the context of the sanitary crisis, and in the face of possible trade and financial restrictions that the Trump administration might impose in the near future.

As of January 1, 2020, Huazhu has 5618 hotels in operation in China, which account for a total of more than 536 000 rooms. These figures make Huazhu the 9th largest hotel group in the world. Its supply is located exclusively within China and comprises a range of products, which include Accor hotels in China.

This move comes after the gains that Chinese groups have experienced during this summer, as the effects of the crisis on their home market followed an earlier temporality with respect to other countries. Although heavily affected at the end of 2019, the Chinese market was able to fully profit from the summer season as its hotel market was one of the first to come out of the sanitary crisis. Moreover, the first effects of a second wave in Europe and the non-resolution of the health crisis in the USA render Chinese operations more attractive.

This situation is reflected on the valorization of the principal hotel groups in the world. The world leader Marriott International lost 35% of its value during the first semester, while Accor lost more than 40% of its value in US$. Contrastingly, Accor’s partner in China, Huazhu, climbed up to the first place on the ranking of groups by room value. With a value of nearly 34 000 dollars per room, Huazhu’s rooms are 6% more valuable than Hilton’s, the group with the second most valuable rooms.

In the face of these good results and an uncertain context, Huazhu’s strategy of shoring up its home market with a secondary listing in Hong Kong is not an outlier. A series of Chinese companies whose shares are already traded in New York, such as Alibaba Group Holding Ltd., JD.com Inc and NetEase Inc., have recently had secondary listings in Hong Kong.

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