Does Jin Jiang eye a board seat at AccorHotels?
 
Does Jin Jiang eye a board seat at AccorHotels?
18 APRIL 2016 7:21 AM

Since Jin Jiang first bought AccorHotels stock last summer, the Chinese hotel company has steadily increased its piece of the pie. Is a seat on AccorHotels’ board its next step? 

Chinese influence in a major French hotel chain keeps growing, but by how much?

In July, Shanghai Jin Jiang International bought it first batch of AccorHotels shares, “up to 4%” of the company, according to sources. On 26 January, Jin Jiang upped its stake in AccorHotels to 5.5%, which made it the French hotel firm’s second-largest shareholder.

On 4 February, Jin Jiang pushed the envelope further and increased its share to 6.03%, which led AccorHotels’ CEO Sébastien Bazin to tell analysts, in response to a question concerning Jin Jiang’s increasing influence, that he though the Chinese company’s overtures were “friendly.”

At an 18 February event following AccorHotels’ latest quarterly and full-year earnings report, I asked Bazin if 6.03% made him worried.

“No, but it might constitute a seat on the board,” he replied.

Eleven days later, Jin Jiang came back to the shop with more money. Currently it owns 11.7% of AccorHotels, according to Reuters, which translates to 10.2% of voting rights.

Last week, on 12 April, rumors abounded that Jin Jiang is contemplating increasing its share by approximately 8% for a new total of approximately 20%, according to Bloomberg News, which cited “people familiar with the matter.”

At 20%, that’s one-fifth of the French hotel company.

I reiterate that the 20% is only a rumor. According to Bloomberg’s sources in its article, Jin Jiang had not made a final decision as to whether to spend an “additional … €735 million ($829.5 million) at Accor’s current share price” on the additional 8% or so of the French company.

No doubt European companies active with their capital also would want such consideration. No one wants to invest considerable amounts of capital into products on the other side of the world if they do not have their executives standing on the ground and sitting in boardroom chairs.

Everyone knows that everyone in Europe is in China and everyone in China is in Europe. For example, AccorHotels itself has a strategic alliance with and a 10.8% stake in Huazhu Hotels Group (also known as China Lodging Group), NH Hotels & Resorts is opening its brands in China with parent company HNA, Fosun owns a chunk of Club Méditerranée, and Jin Jiang itself owns Louvre Hotels Group.

The Louvre deal is particularly interesting in light of Jin Jiang continually upping its stake in AccorHotels, because—not to denigrate other providers—AccorHotels and Louvre are the two biggest players in French hospitality, at least from a chain perspective.

So, when can we speculate AccorHotels executives will free up space at their boardroom table? I presume it would be relatively soon if the rumors hold any weight.

Could it be any other way?

There is no reason to suspect that anything of the sort would not fall under Bazin’s description of “friendly.”

Indeed, the hotel industry on both sides of the world would stand to benefit from experience gained from both regions in terms of target guests, hotel offerings and capital sources.

And if both sides see the worth of all of that, that might suggest a takeover is out of the question. At least for such a behemoth as AccorHotels.

Email Terence Baker or find him on Twitter.

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