The Chinese conglomerate HNA has just added the latest to a string of acquisitions, in the form of US Hotel group Carlson. While HNA already had a portfolio of around 500 hotels, the capture of the Carlson group will almost quadruple that number, and open up the American tourism market.
Carlson operates a number of brands within the hospitality industry, with the most famous of these being Radisson Hotels. HNA’s purchase of Carlson has now gained the company recognizable brands, that have sites within 115 countries, across 1,400 premises.
A year of rapid expansion
Chinese companies have been on a veritable spending spree since the turn of the year, with $94.8 billion worth of outbound mergers and acquisitions already confirmed for the first 4 months of 2016. While last year was a record for Chinese mergers and acquisitions, with a total of $103.6 billion in deals, the total by the end of this year could be something truly staggering.
HNA has been at the very front of this expansion, with 4 purchases of foreign companies already this year, and 2 of those inside the last month. Although the fee paid for the Carlson group has remained undisclosed, Bloomberg valued the company at around $2 billion only last month.
The division of the HNA group which has acquired Carlson is HNA Tourism, and their CEO Bai Haibo said the purchase would “establish our presence in the U.S. market and expand our footprint in hospitality internationally.”
A giant that aims to keep growing
HNA was only launched in 1993, on China’s Hainan Island, and yet it now has assets worth over $100 billion. The group’s flagship company, Hainan Airlines, set the tone for much of its foreign acquisitions as it has targeted airlines, baggage handling, airports, and increasingly hotels. With Chinese tourism growing at a rapid rate, HNA evidently wants to profit from every step of the estimated 200 million outbound trips that the Chinese are expected to make by 2020.
Diversifying its interests allows the group an opportunity to be involved at every level of the travel market. It is no surprise that the group has also got considerable holdings in insurance and banking firms, After all, travelers need insurance and they need access to their money while abroad.
The level of diversification and growth is one that has captured attention even in the M&A world, where such actions are what people work with every day. A mergers and acquisitions banker told the Financial Times that advisers are going to HNA to pitch deals, adding, “We try not to be too prescriptive. HNA is buying everything under the sun.”
HNA has averaged a purchase a month over the past year, and yet the Carlson group is comfortably its largest foray into the hospitality industry. The Carlson group employs close to 90,000 people worldwide, across 115 countries, and had a turnover of $37.6 billion in 2012. For HNA’s expansion across the tourism trade, such a purchase provides a massive boost to its influence and revenue streams.
People that have negotiated with the HNA mergers and acquisitions team speak of the group having a strong and clear idea about building a global tourism empire. The chairman of HNA, Chen Feng, is at the forefront of all negotiations, and has managed to lead a company onto the Fortune 500 list within 25 years of opening.
This remarkable growth, coupled with a determined plan to enlarge, is likely to ensure HNA continues to target hotel and hospitality groups for its portfolio. The Carlson group might well be HNA’s first such purchase, but it is unlikely to be its last.