Ascott seeks Citadines expansion in China with Huazhu partnership

Ascott seeks Citadines expansion in China with Huazhu partnership

The Ascott is stepping up the expansion of its Citadines brand in China through a joint venture with one of the country’s leading hotel operators, Huazhu Hotels Group and its subsidiary and an apartment rental firm, CJIA Apartments Group.

Listed on Nasdaq Stock Market since 2010, Huazhu has a market capitalisation of US$10.4 billion and the third largest market share in China’s midscale hotel segment with a total portfolio of over 380,000 hotel rooms.

CJIA, within a short span of over two years, has expanded quickly to collaborate with over 100 property management firms with 10,000 apartments.

With an initial registered capital of RMB100 million (S$21 million), Ascott, Huazhu and CJIA will hold 50 per cent, ten per cent and 40 per cent respective stakes in the partnership.

The joint venture will focus on growing Citadines in the first-tier Chinese cities of Shanghai, Beijing and Shenzhen for the initial years.

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It has secured its first property in the Pudong district of Shanghai, which will come under the Citadines brand and enjoys easy access to the city’s financial district.

Kevin Goh, Ascott chief executive, said: “Our partnership with Huazhu and CJIA marks Ascott’s most significant and game-changing move in the asset-light ‘manachise’ business to date.

“Huazhu is one of China’s biggest hospitality players with significant local capabilities.

“CJIA has scaled up rapidly in the apartment rental space with more than 90 per cent of its revenue from long-term rentals, which complements Ascott’s strong position in the long-stay business.

“Ascott will be able to tap on Huazhu and CJIA’s vast expertise in operating properties through ‘manachise’, and their over 100 million-member database of domestic corporate and leisure travellers.”

‘Manachise’ is a hybrid of franchise and management contract, whereby an on-site manager appointed by the joint

Goh added: “China remains our top source market globally with the Chinese constituting almost a quarter of our customers and continues to be the fastest growing segment.

“With the joint venture’s target to sign 16,000 units under Citadines by 2025, this will more than triple our current Citadines portfolio in China.

“We will also continue to grow our other award-winning brands including Ascott, Somerset, Tujia Somerset as well as the millennial-targeted, co-living brand lyf.

“Besides manachise, Ascott will continue to expand through investments, strategic alliances, management contracts, leases and franchises.

“We are confident of surpassing Ascott’s global target of 80,000 units this year and doubling our portfolio to 160,000 units by 2023.”