Huazhu Group announced that its subsidiary Huazhu Hospitality (Hong Kong), Chengdu Lingchuang Yipin Hotel Management (a wholly-owned subsidiary of Sunac China Holdings Limited) and Chengdu Global Times Exhibition and Travel Development had formed a joint venture company, named as Yongle Huazhu Hotel & Resort Group (永乐华住酒店管理有限公司) in China with a total registered capital of RMB 50 million. Each of Huazhu Hospitality (Hong Kong) Limited, Sunac, and the Strategic Partner holds 50%, 40%, and 10% of the equity interests in the JV, respectively. The JV is a non-wholly owned subsidiary of Huazhu.
Hotel management services
The JV will provide hotel management services to Sunac’s feasible hotel properties and potential leased and owned hotel properties of third parties.
Huazhu and its wholly-owned subsidiary Steigenberger Hotels AG (“DH”) will authorize the right to develop and operate hotels under the brands of Blossom House (花间堂) and Steigenberger (施柏阁) in Mainland China to the JV. At the same time, Sunac will authorize the right to develop and operate hotels under Sunac’s own hotel brands, including Mauve Hill (堇山), Mauve Glamor (堇悦) and Arcadia Hotels (凤栖桃源) etc., in Mainland China to the JV. In terms of selection of hotel brands, the JV will give priority to Blossom House (花间堂) and Steigenberger (施柏阁) when a hotel property is available and suitable. The JV could also develop its own brands in the future, in addition to those above mentioned brands authorized by Huazhu, DH and Sunac.
Huazhu to provide operational support services to the JV
Huazhu will provide operational support services to hotels which are developed and operated by the JV, including those under the brands of Blossom House (花间堂), Steigenberger (施柏阁), and Sunac’s brands. Such services include, but are not limited to, those relating to Huazhu’s central reservation system, membership loyalty program, hotel operating systems and technologies, as well as shared service centers etc. Huazhu will charge service fees on the services provided to the hotels developed and operated by the JV.
The JV’s Five-Year Target
By leveraging on the core competencies of Huazhu and Sunac, the JV targets to enter into management contracts with more than 200 hotel properties from both Sunac and third-parties in five years after its formation. The majority of the hotels managed by the JV is intended to be upscale or above, full service hotels and under long-term management contracts.
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