March 14, 2012 / 9:58 AM / 5 years ago

Louvre Hotels banks on Chinese partner for expansion

PARIS (Reuters) - Louvre Hotels, owned by U.S. investment group Starwood Capital, is banking on Chinese partner JinJiang Inn to speed up its expansion in fast-growing China and catch up with larger international rivals such as France's Accor.

Louvre Hotels, the world's eighth-largest hotelier, which so far has three hotels in China, plans to open 25 midscale or luxury hotels in the Shanghai region within five years.

Teaming up with Chinese tourism giant JinJiang would sharply accelerate the pace of expansion, however, Chairman Pierre-Frederic Roulot told Reuters on Tuesday.

"We have been lagging in China where we have not reached critical size on our own but we can do it with a partner, which is also the number one Chinese tour operator," he said. "JinJiang and its 800 hotels in China, we could benefit from that. This could be our expansion shortcut."

Roulot was speaking on the sidelines of a news conference in Paris, where Louvre Hotels and JinJiang unveiled new co-branded budget hotel "Campanile & JinJiang", the result of a branding partnership sealed in November to lure clients both in France and China.

The move follows initiatives from international hoteliers such as InterContinental (IHG.L) and Accor (ACCP.PA) to tap into the booming Chinese travel market by catering to Chinese consumers' specific tastes.

Some 57.4 million Chinese tourists travelled overseas in 2010, a 20.4 percent rise from 2009, according to the United Nations World Tourism Organisation (UNWTO).

France is the top destination for Chinese tourists visiting the European Union, ahead of Italy and Germany, currently hosting 500,000-550,000 Chinese tourists a year.

The brand partnership with JinJiang covers 15 Campanile hotels in the five French cities most frequently visited by Chinese tourists - Paris, Bordeaux, Lyon, Marseille and Nice - and 15 JinJiang Inn hotels in the three Chinese cities most popular with French tourists - Shanghai, Xi'an and Beijing.

CHINESE FOOD, FRENCH CROISSANTS

The French hotels will have Chinese brochures, signs, telephone assistance, buffet food and TV channels.

The JinJiang Inn hotels will have similar services targeted at European customers, including French coffee, croissants and "hopefully French sports newspaper L'Equipe", Roulot said.

"Within four to six months we will decide if we extend the partnership to a larger number of hotels," he said. "Our Chinese friends may want to extend it to other European countries or to other brands such as our Golden Tulip luxury brand."

Louvre Hotels bought Dutch hotel operator Golden Tulip in 2009 and is No. 2 for budget hotels in Europe after France's Accor, with 2011 turnover of 1.6 billion euros and 19,000 staff.

It operates more than 1,000 hotels, ranging from one to five stars in 42 countries. Brands also include Kyriad Prestige, Tulip Inn and Royal Tulip luxury hotels.

Louvre Hotels, which wants to be among the top five global hoteliers mid-term, plans to open 76 new hotels this year, including 51 abroad. It opened 63 in 2011.

Roulot, whose wife is Chinese and who has travelled extensively in China, said it was too early to say how the partnership with JinJiang (600754.SS) might evolve.

"There are several possible scenarios. We can continue to develop on our own or benefit from JinJiang. If you could put the two groups together, you would have a player as large as Accor," he said.

"Chinese companies are increasingly interested in finding partners but there are steps to respect. I have a long-term vision of our partnership. I want it to grow progressively,"

According to Intercontinental Hotel Group, which has made expansion in China a top priority, China is expected to overtake the United States as the largest hotel market by 2025, with more than six million available rooms.

Last month, Accor launched a customised Mercure brand for the Chinese market in Shanghai, while InterContinental Hotels plans to launch a new brand developed for the Chinese market.

Editing by James Regan

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