China NHA Group buys 20% of Spain's NH Hotels with $610 mln

China's booming hospitality sector is expanding at a rapid pace. It received 60 million international arrivals in 2010, a 10% increase over the previous year. To cater to the increased number of tourists, China's HNA Group, the parent of Hainan Airlines, is teaming up with the Spanish hotel chain NH to build top-notch hotels across China.

The Spanish tourism industry is receiving a boost this summer as the unrest in the Arab world means visitors are choosing Spain rather than other Mediterranean destinations, which might be problematic.

However China replaced Spain last year as the world's third most visited country behind France and the United States. To cater to this booming market China’s HNA Group is buying 20 per cent of Spain’s NH Hotels for 610 million dollars. A strategic move for the parent company of Hainan Airlines because it gets them management and marketing skills of a well established group.

Francisco Zinser, Chief Operating Officer, NH Hotels, said, “NH hotels is the third largest company (in this sector) from Europe. We basically focus in urban hotels. We have about 400 hotels with about 60.000 rooms located in 25 countries. NH Hotels has a strong focus on urban four stars product. We value the relationship with our customers in a very high standard. We believe we do not sell rooms, we do not sell banquets, we sell experiences and that’s why we focus on the overall experience of our guest NH.”

By selling this stake to HNA, the Spanish company is set to expand throughout China, especially in major cities beyond Shanghai and Beijing. NH will become the preferred hotel for customers of Hainan Airlines and HNA's other business subsidiaries.

“First of all we are extremely excited to be able to go to China, especially with our partners from HNA. We believe they are very strong partners, we know they are the 7thn largest private group in China and we believe that we can bring a lot of knowledge and know-how of the consumer because of what I just mentioned: our strength in the four star urban sector, which is one of the things that HNA has valued very much within NH.” Francisco Zinser said.

HNA's expansion into Spain is the latest example of a trend for Chinese companies to establish joint-ventures with Spanish firms giving them greater access to the global market. Chinese banks have a foothold in Spain and could buy into the ailing and therefore cheap saving bank sector. Last but not least, Beijing has also become a key ally of Madrid as a buyer of 10 bn dollars worth of Spanish debt.

From the Spanish side, China is the market to conquer with exports increasing in value in recent months, as the president of the Spanish Exporters Club points out.

Balbino Prieto, President of Spainish Exporters & Investors Club, said, “Spanish exports have been growing substantially in recent months due to the fact that our market has stagnated. This situation encourages our businessmen to explore other markets. There is no doubt that a market like China with 1.3 billion consumers and growth of around 20% in their trade with the rest of the world becomes an opportunity for our companies. So I would say that the trade deficit that exists between our countries is shrinking considerably.”

"It is not only a financial operation for the Chinese company. The experience and skills of a successful hotel chain like NH could contribute to the current boom in the hospitality sector in China. Alberto Goytre, CCTV, Madrid, Spain"

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