REPORT FROM SPAIN—Spain’s NH Hotel Group plans to open between 120 and 150 midscale and upscale NH-branded hotels in China by 2020, via a new joint venture with its major shareholder HNA Hospitality Group.
Claudio Capaccioli, NH Hotels’ SVP of development and asset management, told Hotel News Now that the joint venture was originally conceived a couple of years ago.
“We’ve been working on it since then, and now we are ready,” Capaccioli said. “We are now starting operations, but the basics have been there since one year ago.”
The joint venture—officially named NH China (Beijing NH Grand China Hotel Management Company Limited)—plans to sign 10 to 20 hotels by the end of the year. The properties, to be built in China’s major cities, will be opened under either the Spanish firm’s NH Hotels or NH Collection brands.
NH Hotel Group operates nearly 400 hotels with 60,000 rooms. If development goals are met with this joint venture, NH will increase its existing portfolio by almost 40% and make China the group’s second-largest market after Spain.
HNA’s investment and cooperation is indicative of Chinese conglomerates’ eagerness to control more steps in the customer’s journey, including booking vacation packages to selecting tour companies, transportation, and hotels and resorts.
“Our main shareholder HNA is Chinese and also is in the tour-operating businesses, and this gives us a decided advantage,” Capaccioli said.
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In a news release, Bai Haibo, chairman of HNA Hospitality Group, spoke about this goal: “HNA Hospitality Group will leverage the leading operation experience, brand awareness of NH Hotel Group and the HNA resources to collaborate very closely to provide high-quality services to Chinese travelers and loyalty members of the two groups.”
A call to HNA Hospitality Group was not returned by press time.
Capaccioli noted that the joint venture is important due to the need for local partners on the ground in China with global expansion.
“Local partners are paramount, without which it is very difficult to grow in China, especially with the aggressive expansion plans NH has,” Capaccioli said. “Again, here, we have a distinct advantage.”
Capaccioli added that NH Hotels’ properties in several key European markets have already received Chinese visitors, and the company started projects to better welcome them. In China, the branding over the doors of the NH properties will feature the words Nuo Han, which have meaning in Chinese but also mirror the consonants NH.
“NH is chameleonic,” Capaccioli said. “We are a global hotel company in 29 countries but with an HQ in Madrid, so our hotels will not export Spain. Hotels will be adapted to Chinese travelers but keep some international flavor. For instance, materials might be more traditional.
“And the idea is to focus on China’s key cities, but the numbers there are different than elsewhere. Its secondary cities often have more than a million (people).”
The joint venture will develop two NH-branded hotels to open in the second half of 2016. The 334-room NH Sanya Phoenix International Airport will be located on the Hainan Island city of Sanya. The 1,001-room NH Haikou Meilan international Airport will be the largest NH Hotel by room count in the world, according to the release.
Some of the properties added to the venture will already be owned by HNA, but not all. According to the release, the business approach fits with NH’s strategy of pursuing growth using capital-light formulas.
NH continues turnaround
Capaccioli said NH’s much-touted economic turnaround—from the recession that damaged Spain more than it did many other European countries—is ahead of course.
“NH started its five-year plan two years ago, and we are bettering it by six months,” Capaccioli said.
Jorge Ruiz, national director of hotels at CBRE Spain, agreed with this assessment. He said NH Hotels has been completely turned around since the recession.
“There is a new management team in place and new shareholders,” Ruiz said.
“Its strategy is purely aligned with that of other global hotel companies, and it is very interested in growing across Europe, Asia and Latin America.”
Ruiz was optimistic about NH’s move into China.
“They have a Chinese shareholder and thus access to that market,” he said. “It is perceived as a brand quite oriented to corporate and business travelers, and for (NH Hotels), it is a must to be there if they want to grow as a brand.”
Ruiz said space for NH Hotels to grow in Spain and other European countries is limited, but even there the market has perceived that it is making all the right moves, with the firm investing the necessary capital expenditure in its portfolio in Europe.