Bottom line: China’s airlines are likely to permanently ban independent travel agents from selling on Qunar and other third-party platform operators, dealing a serious blow to their air ticketing businesses.
Dead end near for Qunar air tickets?
The bad news just keeps coming for travel agent Qunar (Nasdaq: QUNR), with word that its online sales platform could soon be banned for sale of tickets from China Southern (HKEx: 1055; Shanghai: 600029), the nation’s largest airline. Media are reporting that China Southern is preparing to roll out a wide-ranging new policy to govern the agents who sell its tickets. A key part of that will ban agents from selling China Southern’s tickets over third-party platforms like the one that Qunar operates.
This particular bad news is significant but also incremental, since China’s major airlines have been slowly freezing out Qunar this year due to complaints from people who buy their tickets over the company’s online platform. That platform allows independent travel agents to sell tickets on Qunar’s site, with a growing number of agents using deceptive or even fraudulent practices to make sales. Read Full Post…
Bottom line: China Lodging looks like a good long-term bet to become a leading Chinese hotel operator, drawing on an alliance with France’s Accor in its ongoing transformation to become a manager and franchisor of major brands.
China Lodging transforms
Chinese insurer Anbang is making headlines this week with its surprise and intense bid for US hotel giant Starwood (NYSE: HOT), but an equally exciting hospitality story is happening behind the scenes with the quieter transformation of homegrown hotelier China Lodging (Nasdaq: HTHT). The US-listed hotel operator rose to early prominence with its chain of low-cost Hanting hotels, which have become a mainstay for China’s growing legions of budget-conscious travelers.
But more recently the company, also known as Huazhu, has signed a major tie-up with French hotel giant Accor (Paris: AC), owner of the better-known Sofitel and Ibis brands. That move, a first-of-its-kind for a homegrown Chinese hotel brand, should help China Lodging improve its operations and give it a potential entree onto the global stage. Read Full Post…
Bottom line: Anbang is likely to drop its pursuit of Starwood due to objections by Beijing, leaving Marriott as the winner in their brief but frenzied bidding war.
Anbang forced to choose between Starwood and Strategic Hotels
Just a day after I predicted that aggressive Chinese insurer Anbang would make a counter-offer in its bidding war with Marriott (NYSE: MAR) for US hotel giant Starwood (NYSE: HOT), a new report is saying such a bid would almost certainly get vetoed by Beijing regulators. That’s an important new element in this story, since Beijing must approve all global acquisitions of this size by Chinese companies.
This particular move is a bit unexpected, since Anbang almost certainly would have gotten Beijing’s permission before launching its surprise bid earlier this month for Starwood, operator of the Westin and Sheraton brands, which had agreed last year to be bought by Marriott. But in an important twist to the story, Anbang also recently opened talks to pay $6.5 billion for a portfolio of US luxury hotels owned by Strategic Hotels & Resorts. (previous post) Read Full Post…
Bottom line: Anbang is almost certain to make a new counter bid for Starwood above Marriott’s latest offer, and will ultimately win the bidding war due to its determination to make an acquisition at any cost.
Marriott trumps Anbang bid for Starwood
The sudden bidding war for US hotel operator Starwood (NYSE: HOT) is rapidly intensifying, with hometown suitor Marriott (NYSE: MAR) sharply raising its original bid for the company to trump a more recent offer from Chinese insurer Anbang. The move surprised many, including myself, since the new bid represents a 10 percent raise from Marriott’s earlier offer for Starwood made late last year. I had predicted that Marriott might raise its original bid as much as 5 percent, but that it would ultimately shy away from getting into a real bidding war.
Starwood has said it will accept Marriott’s new offer and even signed a deal. But we should also point out it said just days ago it also said it would accept Anbang’s offer as well. So the major question now is whether Anbang will try to top Marriott with a new bid before an April 8 deadline. I suspect the answer to that question is “yes”, since Anbang seems determined to buy Starwood at any price. Read Full Post…
Bidding wars follow certain principles, but the recent battle for US hotel operator Starwood (NYSE: HOT) between local rival Marriott (NYSE: MAR) and Chinese insurer Anbang is quickly diverging from one of the most central rules. In a move that surprised many, including myself, Anbang has suddenly upped its bid for Starwood, increasing its original offer that was already 12 percent higher than Marriott’s original and only bid dating back to last year.
In all my years of covering M&A and bidding wars, this is the first time I can recall of a company increasing its own bid that wasn’t in response to a rival counter bid. The strange move probably reflects Anbang’s worries that its original offer might get rejected by Starwood, which I previously predicted would choose Marriott as a more dependable partner despite its lower offer. Now we’ll have to wait to see if Marriott responds by raising its original offer, which is now about 15 percent lower than Anbang’s latest bid. Read Full Post…
Bottom line: Anbang’s hiring of a consultant to gauge shareholder interest in its bid for Starwood indicates a lack of confidence in reaching a deal with Starwood’s management, and shows its offer is ultimately likely to fail.
Starwood preparing to reject Anbang?
Chinese insurer Anbang is quickly learning that money can’t buy you everything, following its surprise mega-bid for US hotel giant Starwood (NYSE: HOT), operator of the Sheraton and Westin brands. That’s my latest interpretation, following reports that Anbang has hired a professional proxy solicitor to gauge investor sentiment towards its $12.8 billion bid for Starwood that trumped a previous offer by US hotel giant Marriott (NYSE: MAR).
I said earlier this week that Starwood’s board and management were ultimately likely to reject the Anbang bid, and opt for a union with a partner like Marriott that could ensure its longer-term future. (previous post) This latest move implies that Anbang may be getting a cool reception from Starwood’s management, and is testing the waters to potentially take its bid directly to Starwood’s shareholders in what would become a hostile takeover bid. Read Full Post…
Bottom line: Starwood will ultimately reject a rival bid for itself by Chinese insurer Anbang, though earlier suitor Marriott may have to raise its original offer in order to close a deal.
Anbang makes counter bid for Starwood
China is shaping up as spoiler in the biggest US hotel merger of all time, with word that Chinese insurance company Anbang has made a surprise counter bid for Starwood (NYSE: HOT), operator of the Sheraton and Westin brands. The bid comes as the struggling Starwood was preparing to sell itself to larger and better-run US rival Marriott (NYSE: MAR), whose original offer is about 5 percent lower than Anbang’s. The latest twist also comes just a day after media reported that Anbang was in talks for another blockbuster deal to buy Strategic Hotels & Resorts, owner of a portfolio of US luxury hotels, in a deal valued at $6.5 billion.
I previously said that Anbang appears to be a company with too much cash, and would add that it doesn’t seem to have a very strong understanding of the hotel business. Put simply, Anbang seems to be suddenly smitten with any asset containing the word “hotel”, since Strategic and Starwood are very different types of companies. Whereas Strategic is largely a property owner, Starwood earns most of its money from managing hotels under its brands in buildings owned by other companies. Read Full Post…
Bottom line: China Southern’s removal of its air tickets from Qunar represents the latest boycott by a major supplier, and will further deprive Qunar of a key revenue source, causing its losses to further widen.
China Southern dumps Qunar
The bumpy ride for China’s online travel services sector continues this week, with word that leading airline China Southern (HKEx: 1055; Shanghai: 600029) is withdrawing all of its tickets from Qunar (Nasdaq: QUNR) due to a high volume of customer complaints. China Southern is just the latest airline to make such a move on Qunar’s site, following in the path of rivals Air China (HKEx: 753; Shanghai: 601111) and Hainan Airlines (Shanghai: 600221).
This particular series of boycotts marks the latest flare-up in an increasingly tense relationship between online travel sites and the airlines and hotels that are their biggest suppliers. Just last month China Southern reportedly decided to withhold its cheapest tickets from all travel agents. And major hotel operators last year formed a group to counter the increasing clout of Qunar and Ctrip(Nasdaq: CTRP), the industry’s top 2 players that are now allies after forming a major equity tie-up last year. Read Full Post…
Bottom line: Anbang Insurance is paying a big premium for US luxury hotels and may have to sell them for losses when China’s property market corrects, while China Lodging looks like a good bet due to growing profits from its focus on hotel franchising and management.
China Lodging posts big profit growth
A couple of hotel stories are in the headlines as we head into the new week, led by a surprise blockbuster deal that will see Chinese insurer Anbang buy US-based Strategic Hotels & Resorts for $6.5 billion. Meantime, one of China’s largest private hotel operators, China Lodging (Nasdaq: HTHT), has just reported its latest quarterly results that showed a big jump in profitability, as it mimics western peers by focusing on franchising and management services rather than self-developing properties.
These 2 stories both involve hotels but are also quite different, since Anbang’s move is squarely focused on overseas markets and its purchase represents an investment in property ownership. By comparison, China Lodging, owner of the budget Hanting hotel chain, is a domestic story of a company trying to move away from property ownership and into the higher end businesses of hotel management and franchising services. Read Full Post…
Bottom line: Spring Airlines is richly valued at current levels, but could be a strong bet over the next decade as it builds an Asia-wide budget carrier run out of Shanghai.
Spring Air growth set to accelerate
I’m not usually a fan of airline stocks, though one notable exception is budget carriers that tend to be more nimble and cost conscious, and are often run by entrepreneurs rather faceless corporate types. As China’s oldest budget carrier, Spring Airlines (Shanghai: 601021) certainly fits that profile, which is why it’s one of my favorites among Chinese stocks listed both domestically and abroad.
Since making its long-delayed IPO in Shanghai last year, Spring’s stock has soared, more than doubling in price since it first started trading in January 2015. That’s quite remarkable when one considers that the benchmark Shanghai index is down 15 percent over the same period, as China’s stock markets undergo a major correction that dates back to last June. Read Full Post…
Bottom line: Jin Jiang’s Accor investment reflects its global aspirations and could result in a strategic partnership, while SMG’s new Imagine Entertainment investment reflects its increasing focus on film production.
Jin Jiang boosts Accor stake
Two major overseas investments are in the headlines from the leisure and entertainment sector, with hotel operator Jin Jiang (HKEx: 2006; Shanghai: 600754) and Shanghai Media Group (SMG) making major purchases in Europe and the US, respectively. The first deal has the acquisitive Jin Jiang boosting its stake in Accor (Paris: AC) to 11.7 percent, making it the French hotel giant’s second largest shareholder. The second has SMG’s China Media Capital (CMC) unit signing on as one of several new investors in Imagine Entertainment, the Hollywood production company co-founded by director Ron Howard.
Both stories reflect China’s recent drive to form global tie-ups in the leisure and entertainment sectors, as companies try to capitalize on the nation’s booming domestic market and also a growing flood of Chinese tourists traveling overseas. Jin Jiang has been China’s most acquisitive hotel company, while CMC has also been very active in forming tie-ups and investing with big names both at home and abroad. Perhaps it’s no coincidence that both of these companies are based in my adopted hometown of Shanghai, which is also China’s commercial capital. Read Full Post…
