Investor in China Purchases 25% of Hilton Hotels (NYSE:HLT)

481

China is buying up the world, including several US hotels. In the latest development, the Haikou-based HNA Group has purchased a 25 percent stake in Hilton Hotels (NYSE:HLT), which has its headquarters in the state of Virginia. The group is taking up the stake in the hotel chain from the private equity firm Blackstone, which has a 45.8 percent stake in the company.

The deal is worth $6.5 billion. This makes it among the largest cross-border transactions from China this year. It is going to be closed in the first quarter of next year.

With this acquisition, HNA will now have a foothold in Hilton, which is a global hospitality business with 13 brands in different segments including the Conrad Hotels & Resorts, Hilton Hotels & Resorts, Hilton Grand Vacations, Embassy Suites Hotels, DoubleTree, and Home2 Suites, among others.

HNA of China Purchasing US Assets Quickly

The HNA Group runs the Hainan Airlines (SHA:600221) and has been buying leisure assets in the United States for some time now. Last October they purchased 10 golf courses in Seattle for a total of $137 million to get a foothold in the US golf tourism circuit. Earlier in April, HNA took over Carlson that owns the Radisson hotel chain.

Chinese Investments in the US and Europe

The East Asian economic power hasn’t had it easy investing its money in Europe, but the US has been a different matter. Billions are pouring into the country from China, with estimated that up to 80 percent of this investment is in New York alone. However, there are businesses such as Leshi Internet Information & Technology of Beijing that are also heading to smaller cities such as San Jose. They have already taken over a former Yahoo site because of the city’s proximity to the Silicon Valley.

London is also in the eye of China, in spite of Brexit. In the first seven months of this year, a total of $2 billion worth of deals has been signed in the UK with China.

One reason China is buying western hospitality businesses is because the outbound tourism market is booming in the country. More Chinese nationals are traveling to the US since the visa policies were relaxed. The Hilton Hotels (NYSE:HLT) acquisition is a strategic move to consolidate this growth.

The move will give HNA good revenues too. According to a report, hotels in the US have rented more rooms in the last 12 months ending September 30 than in any previous 12 month period.