Ascott Limited (Ascott) of CapitaLand is accelerating the expansion of its Citadines brand in China through a RMB100 million joint venture with Huazhu Hotels Group and CJIA Apartments Group.
Targeting to sign 16,000 units under Citadines in China by 2025, Ascott signed an agreement with two of China’s leading hotel and apartment operators – Huazhu, with a market cap of US$10.4 billion and a portfolio of over 380,000 hotel rooms, and CJIA, which has expanded quickly in a span of over two years with 10,000 apartments.
With an initial registered capital of RMB100 million, Ascott, Huazhu and CJIA will hold 50%, 10% and 40% respective stakes in the partnership.
“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 [management franchise] and their over 100 million-member database of domestic corporate and leisure travellers,” commented Kevin Goh, Ascott’s CEO.
In a statement, Goh mentioned that China remains the company’s ‘top source market’ globally and the joint venture will speed up Ascott’s growing Citadines brand in China in first-tier cities such as Shanghai, Beijing and Shenzhen in the initial years.
Goh added: “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. 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.”
Ascott will continue to expand through investments, strategic alliances, management contracts, leases and franchises.
China was the third largest recipient of foreign direct investment (FDI), receiving a total of US$134 million in 2017. In addition, the World Tourism Organization predicted that China will become the world’s top tourist destination and fourth largest source country by 2020.