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Analysis

The Middle Empire climbs to second place in the global ranking

Jin Jiang's strategy to conquer the world from East to West, coupled with its considerable financial strength, enables it to extend its sphere of influence by entrusting the internationalisation of its brands to its partners. The goal? To become number three in 2019 and topple the American giant Marriott within five years.

The Chinese conglomerate, controlled by Shanghai City Council, has a multi-sector portfolio of activities and owns companies in catering, logistics, leisure and transport. To date, the giant, already a heavyweight in the tourism sector, has almost 700,000 rooms in 7,000 hotels, maintaining its fifth position in the global and European market since 2016.

In 2013, the operator took its first steps into the mid-range hotel market with the launch of the Metropolo brand, following the recent acquisition of 21 Smart Hotels in China.

Two years later, the Chinese conglomerate took over the reins from Louvre Hotels Group, founded by the Taittinger family in 1976. This acquisition enabled Jin Jiang to become the tenth largest hotel group worldwide with 2,208 units and 241,908 rooms.

In the mid-range segment, Jin Jiang is developing its Campanile brand with Louvre Hotels Group. The aim is to open 250 locations worldwide by 2021 and strengthen the Kyriad brand. But the offensive of the world number five is not limited to the mid-scale segment, since the company also invests in the upper segments.

Jin Jiang owns nearly 160 luxury hotels in Asia, most of which are managed by big names such as Waldorf Astoria (Hilton) or Fairmont (AccorHotels). Wishing to create its own universe in the luxury hotel business, the Chinese conglomerate is developing its Kunlun, J Tower and Ying Garden brands as well as the upscale expansion of certain Golden Tulip properties.

In 2016, the giant continues its acquisitions with an increase in the capital of Vienna Hotel Group, enabling it to add 479 units and 60,000 rooms to its portfolio. The same year, the conglomerate acquired Plateno Group, two years after it had acquired 7 Days Group.

In 2016, Jin Jiang overtook Home Inns. It was the first Chinese operator to join the top 10 of the world's largest groups in 2012 and it ranked eighth as of January 1, 2018.

Recently, HNA agreed to sell its interests in Radisson Hospitality AB and Radisson Holdings to the Chinese consortium Jin Jiang. A significant loss for HNA which operates 6,800 rooms while Radisson Hotel Group has 182,192 rooms.

The acquisition of Radisson Hotel Group, completed by the acquisition of the Indian company Sarovar Hotels in 2017, would propel Jin Jiang to second place in the ranking with 862,303 rooms. The American group Hilton, which will celebrate its 100th anniversary in 2019, would then drop to third place, with 14,000 fewer keys than the new entrant.

Europe also remains at the heart of their concerns, with strategic markets such as Germany and Great Britain. Indeed, with the acquisition of the American-Scandinavian operator, Jin Jiang would have a capacity of 123,896 rooms in Europe, a 75% increase. But it is not enough to surpass AccorHotels' 292,429 rooms, of which Jin Jiang is the largest shareholder with a 12.3% stake.

It should be noted that the Chinese group would relegate IHG, one of the historic leaders of the Old Continent, to third place in the ranking, with a difference of more than 27,000 rooms. However, to catch up with the French challenger, Jin Jiang would need to acquire more than double its capacity, or 168,533 rooms. This is equivalent to the European portfolios of Best Western (78,051 rooms), Whitbread (67,554 rooms) and Scandic (33,198 rooms) combined.

The arrival of Jin Jiang in the top 3 is symptomatic of the rise of Chinese groups in the hotel business, but comes at the expense of American brands such as Best Western, which lost its 10th place, as well as Greentree Hotel Management (+13.9%), Wyndham Hotel Group (+13.9%) and Hyatt (+7.0%) which recorded good growth in 2017.

Further takeovers and strong growth by Chinese groups could be announced in the coming years. This is a new era for hoteliers in the Middle Kingdom.

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