French hotel giant Accor said its new strategic partnership with China Lodging Group will give earnings a major boost after the first year and give it a major foothold in the Chinese domestic market.
In a $160 million deal, China Lodging Group will become the main franchisee for Accor’s budget and midrange hotels in China.
"The transaction reflects Accor’s strong will to expand in China," said chief executive Sebastien Bazin.
Bazin highlighted the huge growth potential still to be realized in China.
"There are 15 hotel rooms in the United States for 1,000 people, 10 hotel rooms for 1,000 people in Europe and less than two hotel rooms in China."
The agreement will integrate Accor’s budget and midrange brands Ibis, Novotel and Mercure with the almost 2,000 Huazhu hotels operated by China Lodging.
As part of the alliance, Huazhu plans to open up to 400 new hotels under Accor brands in the next five years.
In addition the two companies "will link the power of both groups’ reservation and loyalty platforms, providing an expanded distribution capability," Bazin said.
