Ascott signs JV with Huazhu to roll out Citadines brand in China

George Sell George Sell Uploaded 08 May 2018

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China: Ascott is stepping up the expansion of its Citadines brand in China through a joint venture with Huazhu Hotels Group and its subsidiary CJIA Apartments Group (CJIA).

The joint venture is aiming to have 16,000 Citadines-branded units in China by 2025.

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 more than 380,000 hotel rooms. CJIA has expanded quickly to collaborate with more than 100 property management firms with 10,000 apartments.

With an initial registered capital of RMB 100 million (S$21 million), Ascott, Huazhu and CJIA will hold 50 per cent, 10 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. 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's CEO, 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% 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."
 
"The joint venture will fast-track Ascott's growth in China and accelerate the boost in recurring fee income given the shorter timeframe to open a new property. The manachise business model focuses on design and product standardisation, as well as economies of scale, resulting in time and cost savings for the manachisees. Manachise will also allow our joint venture to actively manage the properties and maintain the quality of our world-renowned Citadines brand while enjoying franchise fees. Coupled with Ascott's international marketing network and experience in managing award-winning properties worldwide, our formidable partnership with Huazhu and CJIA will give us a leading edge in the market," he added.

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