SINGAPORE - CAPITALAND'S serviced residence arm, The Ascott (Ascott), is setting up a joint venture with Nasdaq-listed Huazhu Hotels Group and apartment rental firm CJIA Apartments Group to expand its Citadines brand in China.
With a market capitalisation of US$10.4 billion, Huazhu has the third largest market share in China's midscale hotel segment with a total portfolio of over 380,000 hotel rooms. Its subsidiary CJIA collaborates with over 100 property management firms to offer 10,000 apartments.
The joint venture will have an initial registered capital of 100 million yuan (S$21 million), with Ascott, Huazhu and CJIA holding 50 per cent, 10 per cent and 40 per cent respectively in the partnership. In the initial years, the JV will expand Citadines' footprint in first-tier cities such as Shanghai, Beijing and Shenzhen. It has secured its first property in the Pudong district of Shanghai.
The joint venture is targeting 16,000 units under the Citadines banner by 2025, which would more than triple Ascott's existing Citadines portfolio in China.
Ascott has more than 110 properties with over 20,000 units across China. Of these, 30 are Citadines-branded properties with close to 5,000 units in 19 cities.
Kevin Goh, Ascott's chief executive, said: "The joint venture will fast-track Ascott's growth in China and accelerate the boost in recurring fee income given the shorter timeframe to open a new property. The manachise business model focuses on design and product standardisation, as well as economies of scale, resulting in time and cost savings for the manachisees." Manachise is a hybrid of franchise and management contract, where an on-site manager appointed by the joint venture will manage the operations of the property.
Mr Goh added: "We are confident of surpassing Ascott's global target of 80,000 units this year, and doubling our portfolio to 160,000 units by 2023."
Jin Hui, president of Huazhu Hotels Group and CEO of CJIA Apartments Group, said: "Huazhu's collaboration with Ascott to expand Citadines through manachise will enable us to scale up quickly in the midscale hospitality segment, and broaden our range of brands for our customers.
"There is strong domestic demand for quality accommodation and we will continue with our multi-brand strategy to grow our presence in China."