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While the cultural and tourism market is booming, a number of luxury hotels are about to change hands.

Recently, luxury hotels have been transferred or auctioned in many places. Some of them need to cash out due to debt problems of the owners. For example, Sofitel Beijing Hotel enjoys a prime location at the intersection of Beijing's Chang'an Avenue and the East Second Ring Road. It is surrounded by famous attractions such as Tiananmen Square and the Palace Museum. It was once a well-known "check-in spot" in the local area, but it recently appeared on a trading website with a quotation of 2.8 billion yuan.

Others are about to face a full auction due to the bankruptcy and liquidation of the company behind them, such as the Chongqing Beibei Banyan Tree. According to the Chongqing Bankruptcy Court, Chongqing Baichun Industrial Company is going bankrupt and liquidated, and the Banyan Tree assets under its name will be publicly auctioned in early September, with a starting price of 700 million yuan. In Jiangsu, Hunan, Hainan and other places, there are also reports of many hotel asset packages being auctioned.

Why do luxury hotels frequently change hands? Senior tourism analyst and senior economist Zhao Huanyan told China Business News that the global tourism industry is recovering and occupancy rates have increased. However, in terms of details, the supply of guest rooms in the Chinese hotel market was relatively large before. It can even be said that the increase in the number of guest rooms in some regions was greater than the increase in consumer demand, which led to a decline in the performance of some hotel projects and hotel management companies.

Some industry observers also told Caixin that, in fact, except for the three-year "low period" of the epidemic, hotel assets have always been a popular category for large-scale transactions. Before the epidemic, many hotel assets were converted into office buildings. After the epidemic, the hotel industry recovered, but some owners hoped to sell at a good price to "cash out", while potential buyers were interested in investing in the rebound of the hotel industry. Overall, market demand is relatively stable.

Well-known hotel will change hands again

Only four kilometers away from Beijing's Tiananmen Square and the Palace Museum, Sofitel Beijing is located in the core area of ​​the city. This luxury hotel, which has many stories in the past and has undergone several renovations and changes of ownership, has recently been put on the "shelf" for sale.

Market news shows that the sale information of Sofitel Beijing Hotel was recently announced on the hotel trading website. The hotel is located at the intersection of Chang'an Avenue and East Second Ring Road in Beijing. The price is 2.8 billion yuan, with more than 300 rooms and a construction area of ​​over 60,000 square meters. The reason for the sale is that the property owner Tianfu Rongde Hotel (Beijing) Co., Ltd. Jianguomen Branch is facing debt problems and plans to solve them by transferring the hotel.

The reporter saw on the above website that a piece of information "Beijing Chang'an Avenue top five-star hotel for sale" showed that the asset was the Sofitel Beijing Hotel, located near Jianguomen, and is currently being sold to the public. The hotel type is five-star.

In the Beijing market, there are quite a few hotels that are listed for trading, but the Sofitel Beijing is quite special, with many stories behind it.

As early as the 1990s, COFCO Group entered the hotel industry, taking over the Tianping Lee Garden Hotel and introducing the Gloria Hotel Group for operation and management. The Gloria Hotel, positioned as a four-star hotel, began operations. Public information shows that the Gloria Hotel was once a landmark building in Beijing and was once quite famous as the official reception hotel for the Beijing Olympic Games in 2008.

However, influenced by the hotel's positioning and market demand, COFCO Group decided to demolish and rebuild the Gloria Hotel, and the W Hotel on Chang'an Avenue in Beijing officially opened in September 2014. W Hotel is a luxury hotel brand under Starwood Group. In 2015, Starwood was acquired by Marriott International. The brand has a trendy and young style and is known as the "trendsetter in the city". COFCO had high expectations for it.

However, since its opening in September 2014, the performance of Chang'an Street W Hotel has not been ideal, and it was immediately put up for sale by COFCO in 2017. At that time, 100% of the equity of COFCO Hotel (Beijing) Co., Ltd. was transferred through public listing. The announcement showed that Chang'an Street W Hotel had a net loss of 96.1369 million yuan in 2016, and the newly entered Tianfu Fund Management Co., Ltd. is now the hotel's major shareholder.

After the change of new owners, the W Chang'an Avenue Hotel continued to operate for several years until Marriott International's operating service agreement was terminated in 2019, and the W Chang'an Avenue Hotel Beijing, which had lasted for 4 and a half years, was delisted. In February of that year, Accor Group, Mingyu Business Hotel and Tianfu Rongde Hotel (Beijing) Co., Ltd. jointly signed a cooperation document to introduce Accor's luxury hotel brand, which was listed as Sofitel Hotel.

Now, this luxury hotel with many stories may change its "owner" again. Tianyancha information shows that the company to which the hotel belongs, Tianfu Rongde Hotel (Beijing) Co., Ltd. Jianguomen Branch, had an execution debt information in May this year, and was executed by the Shanghai Financial Court for 102 million yuan. The Tianfu Rongde Hotel (Beijing) Co., Ltd. behind it also had equity freezing information this year.

Li Xiang, head of the research department of Savills North China, told Caixin that except for the three years of the epidemic, hotel assets have always been one of the popular subcategories of large-scale investment transactions. Most investors who acquired hotels before the epidemic were interested in the operating value of their assets, and some also had the investment purpose of transforming them into office buildings. The three-year epidemic has caused a major impact on the hotel industry. Compared with other assets such as shopping malls, office buildings, and industrial parks, hotels have been more affected and once fell into a "trough period." However, after the epidemic, the commercial office market showed a new trend. Some hotel asset holders hope to sell off "cashing out", and potential buyers also see the investment value after the industry recovers. The relevant assets still have a certain liquidity in the large-scale investment market.

The hotel industry still faces challenges after recovery

Not only in Beijing, but also in many places, there have been news of luxury hotel transfers or judicial auctions recently. According to Alibaba Asset Auction Network, the asset package of Chongqing Baichun Industrial Company located on Wenquan Road, Chengjiang Town, Beibei District will be auctioned on September 2, with a starting price of 700 million yuan.

Public information shows that the auction items include the Banyan Tree Hotel in Beibei, Chongqing, the land use rights and above-ground buildings of 9 plots of land of Banyan Tree Phase II, and the "unfinished" Banyan Tree Resort Hotel which has been suspended for many years and is in poor maintenance condition.

Banyan Tree Group was founded by the Ho Kwong Ping family in 1984. The brand was established in 1994. It is headquartered in Singapore and has 26 hotels in the Chinese market.

The First Financial reporter learned that, unlike general high-end hotels, Banyan Tree focuses on high-end resorts, and many projects adopt stand-alone buildings. Coupled with the brand's own luxurious SPA features, the construction cost of Banyan Tree resort hotels is very high, which puts high demands on operating profits.

However, the hotel industry has been affected by the pandemic and faced market competition in recent years, and the overall challenges it faces are not small. Tianyancha data shows that as of July 2024, there are nearly 2.6 million "hotel" related companies. From January to July 2024, more than 200,000 new related companies were added, a decrease of 16% compared with the same period in 2023.

Zhao Huanyan, a senior tourism industry analyst and senior economist, told China Business News that the global tourism industry is recovering and occupancy rates have increased. However, in terms of details, the supply of rooms in the Chinese hotel market was relatively large before, and it can even be said that the increase in the number of room supply in some regions was greater than the increase in consumer demand, which led to a decline in the performance of some hotel projects and hotel management companies.

"According to public information, InterContinental's revenue per available room in the Chinese market in the first half of 2024 fell by 2.6% year-on-year, including a 7.0% drop in the second quarter. Marriott's revenue per available room in the Chinese market in the second quarter of 2024 fell by 4.2% year-on-year. Accor's revenue per available room in the Asia-Pacific region fell by 12% year-on-year in the second quarter of 2024, and the average occupancy rate fell by 7% year-on-year. This shows that a number of high-end hotels and resorts are under great operating pressure. Relatively speaking, the operating costs of high-end hotels are too high, and it is understandable that a number of high-end hotels choose to sell when their income is not enough to cover their expenses." Zhao Huanyan analyzed to Caixin.

Public data shows that on June 20 last year, the Chongqing Jiefangbei Westin Hotel was auctioned at a starting price of 1.038 billion yuan by the court, but no one participated in the auction, resulting in the bid failing. The Bulgari Hotel Shanghai was also listed for sale before.

In addition to the operating pressure of the hotel itself, the financial situation of the owner and investor is also the main reason for the sale of high-end hotel assets such as Banyan Tree.

Qichacha shows that Chongqing Baichun Industrial Company, the parent company of Chongqing Beibei Banyan Tree Hotel, was declared bankrupt and reorganized due to its arrears of tens of millions of yuan in project debts to Chongqing Yuzhou Garden Engineering Company. The relevant court finally ruled in late August last year that Chongqing Baichun Industrial Company should be bankrupt and liquidated.

Wei Changren, founder of Jinlv.com, told China Business News that hotel assets have cash income from direct operations and potential income from asset appreciation, and these two types of income coexist in investment categories, which have been favored by various large investment institutions for many years. "In the past one or two years, asset prices have fallen sharply. On the one hand, the income of high-star hotels generally does not meet expectations. On the other hand, large hotel investment institutions are particularly short of cash flow. Choosing to sell at this stage is also a reasonable way to improve their own investment allocation." Wei Changren said.

In Li Xiang's view, after the economic order returned to normal in the post-epidemic era, the hotel industry actually rebounded. In addition to the investment value of the assets themselves, investors also valued the operating income of the hotels. The overall performance of the hotel industry after the epidemic was very outstanding, making it an important investment category. "From the perspective of the acquirer, the backgrounds and sources of funds of potential buyers are very diverse, including some real economy companies and private entrepreneurs. Their investment purpose is very clear, that is, to look at asset returns and market performance. Hotels generally have very professional brand operators to manage the projects, and the buyers only need to play the role of financial investment."

Li Xiang also said that compared with office assets, high-quality hotel assets are sold at a lower "discount". Previously, many similar transactions in first-tier cities were sold at relatively good prices. This is also due to the rapid recovery of the industry as a whole after the epidemic. The investment value began to emerge and funds began to focus on this sub-asset category. "Overall, the market demand for the hotel industry is sustained and stable. In the medium and long term, the industry will be in a stable and rising trend, and the prospects for asset investment are promising."