Ascott is stepping up the expansion of its
Citadines brand in China through a joint venture with one of
China’s leading hotel operators Huazhu Hotels Group (Huazhu) and
Huazhu’s subsidiary and an apartment rental firm, CJIA Apartments
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.
initial registered capital of RMB 100 million (S$21 million),
Ascott, Huazhu and CJIA will hold 50%, 10% and 40% 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.
The JV 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.
Ascott’s partnership with Huazhu and CJIA marks Ascott’s most
significant and game-changing move in the asset-light manachise
business to date. Manachise is a hybrid of franchise and
management contract, whereby an on-site manager appointed by the
joint venture will actively manage the operations of the property.
Mr Kevin Goh, Ascott’s Chief Executive Officer,
said, “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.”
Mr 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, coliving 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.”
Ascott has more than 110 properties with over
20,000 units across more than 30 cities in China. Of these, 30 are
Citadines-branded properties with close to 5,000 units in 19