Well, well, well, if it hasn’t been quite the year for China-based companies and hotel purchases. Earlier this year, we saw the bidding war between Chinese insurance company, Anbang, and Marriott for Starwood’s hand in marriage (the Marriott-Starwood union was finalized in August of this year), and now we’ve got another suitor on our hands. Aviation and shipping conglomerate HNA announced their purchase of a 25% stake in Hilton Worldwide Holdings, Inc from Blackstone Group to the tune of $6.5 billion.
Those who remember the original Hilton-Blackstone buyout (pre-recession) was for a hefty $26.5 billion, though the drop in the economy later forced the Financial Services giant to restructure the debt and Hilton returned to being a public company in late 2013. Blackstone retained a 45.8% stake in the company.
According to the Wall Street Journal, the transaction is expected to close in early 2017. The agreement allows HNA to appoint two directors to Hilton’s Board of Directors – one HNA member and one independent member – bringing the total to 10 members. Blackstone will keep two seats on the board, including Jon Gray, Global Head of Real Estate at Blackstone.
If you think you’ve heard HNA before, it’s because you have – they’re the parent company to Hainan Airlines(HU). You may have heard of them in association with another purchase earlier this year – May 2016, they purchased a 13% stake in Virgin Australia. HNA owns five major entities, with companies in the aviation, real estate and retail, financial services, tourism, and logistics industries.
The first question that usually comes up with these acquisitions is what impact will it have on Hilton? The purchase reduces Blackstone’s share to about 21% – though the balance of the remaining 64% or so shares are publicly traded. HNA’s stake won’t be the majority here, so it looks like this is a financial investment for the multi-industry firm. Meanwhile, it’s no secret that China is a huge market that all tourism major players want to have a stake in – and this purchase will hopefully increase Hilton’s footprint in Asia.
Will we be seeing some HU-Hilton tie ups in the future? Who knows what the newfound siblings will have in store for the travel industry.