Accor Signs Major Deal with Huazhu Hotels Group

Accor and Huazhu Hotels Group (also known as China Lodging Group) have partnered to create one of the most prominent and diversified hotel companies in China, with more than 2,000 hotels and the strongest pipeline in the country.

With a portfolio of over 1,900 hotels. Huazhu’s hotel brands cover the full spectrum of the market from upscale (Joya, Manxin) to midscale (JI Hotels, Starway) and economy (Hanting, Elan and Hi Inn).

Accor currently has 144 hotels in China across eight brands including upscale (Sofitel, Pullman, MGallery, Grand Mercure); midscale (Novotel, Mercure) and economy (ibis, ibis Styles).

The alliance between the two will rapidly accelerate both groups’ expansion plans in what is today one of the largest and fastest-growing domestic travel markets and the world’s largest outbound travel market.

The objective of the alliance is to bring together the best of the two respective groups, combining Accor’s internationally recognized brands and powerful global distribution network with the extensive coverage, local reputation and strong development capability of Huazhu Hotels Group in China.

Together the groups have more than 500 hotels in the pipeline in the region and the alliance is expected to further accelerate development to new levels and see faster expansion of Accor’s brands in China.

Huazhu founder, Chairman and CEO, Ji Qi, said, “With an extensive brand portfolio, and strong distribution and loyalty platforms, Accor and Huazhu share a lot of common values. By combining forces we can facilitate growth and attract more customers to the expanded network.”

Pursuant to the transaction, Accor’s economy and midscale platform in China will become part of Huazhu. Under the arrangement, Huazhu will become Accor’s exclusive master-franchisee operating and developing in Mainland China, Mongolia and Taiwan for the economy (ibis, ibis Styles,) and midscale segments (Novotel and Mercure), as well as the upscale Grand Mercure brand.

Accor will continue to lead the ownership and development of all its luxury and other upscale brands in China, including Sofitel, Pullman, MGallery and The Sebel. Huazhu will become a minority shareholder in Accor’s luxury and upscale business in China (10%) and will help support future development in the country, thanks to its in-depth relationships with key Chinese real estate investors.

All Accor’s existing hotels in China will continue to be operated under their current international brand standards, benefitting from current global distribution and loyalty platforms, together with the added support of Huazhu’s networks and domestic reputation.

Under the arrangement, Accor will take a 10% stake in Huazhu and will have a seat at Huazhu’s board of directors.

Huazhu plans to open 350 to 400 new hotels under the Accor brands in the next five years.

The agreement will offer the customers of both loyalty programs (together 47 million card holders) the opportunity to access a network of over 5,600 hotels globally.

“China is today the largest outbound tourism market in the world; in that context, creating one of the largest hotel groups in China will lead to growth globally as those travelers come to recognize Accor and Huazhu’s brands and expand their travel internationally,” said Sebastien Bazin, Chairman and CEO of Accor. “This agreement will also help us better anticipate customers’ expectations and strengthen our leadership in the Chinese market over the long term.”

The conditions to the closing of this transaction include the obtaining of requisite governmental approvals and the completion of certain corporate restructuring.