Who are Marriott’s key owners in China?

Marriott’s growth in China will depend on partnerships to build and operate hotels. But who are these partners?

We have compiled a list of six key owners of Marriott hotels in China. The following graphic is a summary of their respective Marriott hotels portfolio.

Overall, these six companies combined developed around 16% of all Marriott hotels in China.  Marriott divides its hotels brands into three tiers: luxury, premium, and select.[i] The following graphic summarizes the percentage of existing Marriott hotels in China owned by the six companies, broken down by tiers.

We believe this is the first English-language list produced of Marriott’s Chinese partners. This list doesn’t include Dossen, the hotel company which signed an agreement to develop Marriott’s Fairfield brand in China; that deal will be explored in depth in a future series.

 

R&F Properties

  • Number of Marriott Hotels Owned: 14
  • Number of Marriott Hotels in Development: 4

R&F Properties was part of the elite group of Chinese real estate developers known as the “Five South China Tigers” for their aggressive business style. R&F listed on the Hong Kong Exchange in 2005. [ii] The company made a number of significant high-profile purchases in 2017, including the purchase of 73 of Wanda’s mainland hotels and its London hotel project.[iii] [iv] In March 2018, R&F Properties reportedly purchased one of HNA’s Hainan properties; HNA declined to comment on the reported purchase.[v]

 

Greentown China

  • Number of Marriott Hotels Owned: 9
  • Number of Marriott Hotels in Development: 2

Greentown China is the tenth largest real estate developer in China in terms of contracted sales.[vi] The company’s top 3 shareholders were the state-owned China Communications Construction Group, the Wharf Holdings, and founder Song Weiping.[vii] Greentown China reportedly was on the verge of bankruptcy in 2015, before the China Communications Construction Group became the largest shareholder.[viii]

 

Greenland Holdings

  • Number of Marriott Hotels Owned: 6
  • Number of Marriott Hotels in Development: 3

Greenland Holdings is the sixth largest real-estate developer in China in terms of contracted sales in January 2018.[ix] In the U.S., Greenland constructed the massive Metropolis condo and hotel complex in downtown Los Angeles.[x] In 2016, Greenland affiliate Shanghai Yunfeng Group Co. was in default on 2 billion yuan of privately placed notes after the triggering of early repayment clauses.[xi] In 2017, the company revealed that its subsidiaries in the Liaoning Province had overdue loans of around $69.2 million.[xii]

In March 2018, the company put two buildings in the Metropolis complex up for sale; the CEO of Greenland’s US subsidiary expected completion of the final tower in 2019.[xiii] In April 2018, Nikkei Asian Review reported that the group’s shares fell 5.7% after reporting a 19% drop in first-quarter contracted sales at 5.7 billion yuan.[xiv]

 

Jinmao

  • Number of Marriott Hotels Owned: 6
  • Number of Marriott Hotels in Development: 1

China Jinmao is the property arm of the state-owned chemical group Sinochem.[xv] One of the real-estate group’s most famous properties is the Jin Mao Tower in Shanghai, at one point Shanghai’s tallest building.[xvi] In October 2017, the Hong Kong office of Jinmao reportedly was searched by Hong Kong’s Independent Commission Against Corruption (ICAC) as part of an investigation into bribery; the company’s CFO was asked to visit the ICAC office. The company stated that neither the company nor any of its units are subjects of the investigations.[xvii] JP Morgan downgraded the company to ‘neutral’ from ‘overweight’ and stated, “Without clarity on any of the details, we believe corporate governance risk will remain high and advise investors to be cautious on the name.”[xviii]

 

Powerlong

  • Number of Marriott Hotels Owned: 6
  • Number of Marriott Hotels in Development: 1

Powerlong, a conglomerate with real estate interests,[xix] was founded in 1992 by Hoi Kin Hong, father of the current CEO Hoi Wa Fong.[xx] The company listed on the Hong Kong Exchange (HK.1238) in 2009.[xxi]

Hong Kong’s Securities and Futures Commission (SFC) fined two units of the Industrial and Commercial Bank of China for their role in the Powerlong IPO, for which they had acted as joint sponsor and joint lead manager.[xxii] According to the law firm Deacons, the investigation followed from an anonymous complaint which alleged that ICBCI Securities procured nominee accounts to subscribe for Powerlong’s offer shares and that such subscriptions were financed by Powerlong.[xxiii] The findings of the SFC were summarized by Reuters:

“The SFC said the two units of ICBC failed to conduct so-called “know-your-client” due diligence on some buyers of Powerlong shares to make sure they were independent of the issuer.

The regulator also said that some buyers were offered margin financing in excess of the buyers’ net worth in a bid to prevent the listing from falling through.”[xxiv]

In particular, Deacons reported that the SFC investigation revealed that some of the placees were friends and families introduced by Powerlong. [xxv]

 

HNA

  • Number of Marriott Hotels Owned: 4
  • Number of Marriott Hotels in Development: 4

HNA was founded in 1993 by Chen Feng as a provincial airline company under the name Hainan Airlines.[xxvi] [xxvii] The company has evolved into a colossal global conglomerate through a series of debt-financed foreign acquisitions – the company held $150 billion of assets in 2016.[xxviii] A prolific deal-maker, HNA purchased a 25% stake in Hilton Worldwide and a 10% stake in Deutsche Bank.[xxix] However, news reports state that HNA has been facing an increasing amount of pressure from its lenders after missed payments in January 2018.[xxx] [xxxi] The company has been looking to sell various parts of its foreign assets since then: it has sold approximately one-fifth of its holding in Deutsche Bank, and announced that it plans on selling all or part of its holdings in Hilton in April 2018.[xxxii] [xxxiii]

 

[i] Marriott International, FORM 10-K (Fiscal Year 2016), p. 5, retrieved May 3rd, 2018, https://www.sec.gov/Archives/edgar/data/1048286/000162828018001756/mar-q42017x10k.htm

[ii] R&F Properties, Group Profile, retrieved May 1st, 2018, http://www.rfchina.com/template/Yabout.aspx

[iii] Caixin (2018 March 20th), R&F Expects $126 Million Revenue This Year From Former Wanda Hotels, retrieved May 3rd, 2018, https://www.caixinglobal.com/2018-03-20/rf-expects-126-million-revenue-this-year-from-former-wanda-hotels-101223819.html

[iv] Bloomberg (2018, January 16th), Dalian Wanda Sells Its London Towers, retrieved May 1st, 2018, https://www.bloomberg.com/news/articles/2018-01-16/dalian-wanda-is-said-to-sell-london-homes-hotel-project-to-r-f

[v] Ecns.cn (2018, March 21st), HNA sells assets across China, retrieved May 1st, 2018, http://www.ecns.cn/business/2018/03-21/296563.shtml

[vi] South China Morning Post (2018, January 2nd), Top Chinese developers tighten grip on housing market despite overall slowdown, retrieved May 1st, 2018, http://www.scmp.com/property/hong-kong-china/article/2126531/top-chinese-developers-tighten-grip-housing-market-despite

[vii] South China Morning Post (2017,  April 18th), Chinese developer Greentown China Holdings expects 2017 to be a window for land acquisitions, retrieved May 1st, 2018, http://www.scmp.com/business/article/2088213/chinese-developer-greentown-china-holdings-expects-2017-be-window-land

[viii] South China Morning Post (2017,  August 28th), Developer Greentown sees dramatic turnaround in fortunes after major disposals, retrieved May 1st, 2018, http://www.scmp.com/business/companies/article/2108539/developer-greentown-continues-enjoy-dramatic-turnaround-fortunes

[ix] South China Morning Post (2018, January 2nd), Top Chinese developers tighten grip on housing market despite overall slowdown, retrieved May 1st, 2018, http://www.scmp.com/property/hong-kong-china/article/2126531/top-chinese-developers-tighten-grip-housing-market-despite

[x] Los Angeles Times (2017, July 13th), Massive Metropolis condo complex ushers in a new era of residential development in downtown L.A., retrieved May 2nd 2018, http://www.latimes.com/business/la-fi-metropolis-phase-one-20170713-story.html

[xi] Bloomberg (2017, August 29th), China’s 4th Biggest Builder Discloses Overdue Debt, retrieved May 2nd, 2018, https://www.bloomberg.com/news/articles/2017-08-29/china-s-4th-biggest-builder-discloses-overdue-debt-in-first-half

[xii] Bloomberg (2017, August 29th), China’s 4th Biggest Builder Discloses Overdue Debt, retrieved May 2nd, 2018, https://www.bloomberg.com/news/articles/2017-08-29/china-s-4th-biggest-builder-discloses-overdue-debt-in-first-half

[xiii] Los Angeles Downtown News (2018, March 5th), Two Buildings in Metropolis Hit the Market, retrieved May 2nd, 2018, http://www.ladowntownnews.com/news/two-buildings-in-metropolis-hit-the-market/article_ea57e0e2-1e65-11e8-9ff9-6bb1438d8def.html

[xiv] Nikkei Asian Review (2018, April 11th), Hong Kong shares rise for fourth day after Yi Gang’s speech, retrieved May 2nd, 2018, https://asia.nikkei.com/Business/Markets/Nikkei-Markets/Hong-Kong-shares-rise-for-fourth-day-after-Yi-Gang-s-speech

[xv] Financial Times (2017, October 24th), China Jinmao CFO asked to visit HK anti-graft agency as offices searched, retrieved May 1st, 2018, https://www.ft.com/content/74394a73-ce16-3cbe-ba29-648450f40203

[xvi] South China Morning Post (2017, October 25th), Chinese developer Jinmao searched by Hong Kong’s anti-graft agency, retrieved May 1st, 2018, http://www.scmp.com/business/article/2116899/chinese-developer-jinmao-searched-hong-kongs-anti-graft-agency

[xvii] South China Morning Post (2017, October 25th), Chinese developer Jinmao searched by Hong Kong’s anti-graft agency, retrieved May 1st, 2018, http://www.scmp.com/business/article/2116899/chinese-developer-jinmao-searched-hong-kongs-anti-graft-agency

[xviii] South China Morning Post (2017, October 25th), Chinese developer Jinmao searched by Hong Kong’s anti-graft agency, retrieved May 1st, 2018, http://www.scmp.com/business/article/2116899/chinese-developer-jinmao-searched-hong-kongs-anti-graft-agency

[xix] “Company Profile,” Powerlong, retrieved 5/3/18. http://www.powerlong.com/about/about!company.action.

[xx] Powerlong, Board of Directors, retrieved May 1st, 2018, http://www.powerlong.com/irm/irm-govern!direct.action

[xxi] The Wall Street Journal (2009, October 15th), Powerlong Posts Modest IPO Debut, retrieved May 1st, 2018, https://www.wsj.com/articles/SB125551792581984599

[xxii] Reuters (2014, May 21st), UPDATE 1-HK fines, reprimands ICBC units for role in 2009 IPO, retrieved May 1st, 2018 https://www.reuters.com/article/hongkong-icbc-fine/update-1-hk-fines-reprimands-icbc-units-for-role-in-2009-ipo-idUSL3N0O72M720140521

[xxiii] Deacons (2014, June 9th), Lesson learned from a recent disciplinary action by SFC – Don’t go too far in facilitating a share offer, retrieved May 1st, 2018, http://www.deacons.com.hk/news-and-insights/publications/lesson-learned-from-a-recent-disciplinary-action-by-sfc.html

[xxiv] Reuters (2014, May 21st), UPDATE 1-HK fines, reprimands ICBC units for role in 2009 IPO, retrieved May 1st, 2018 https://www.reuters.com/article/hongkong-icbc-fine/update-1-hk-fines-reprimands-icbc-units-for-role-in-2009-ipo-idUSL3N0O72M720140521

[xxv] Deacons (2014, June 9th), Lesson learned from a recent disciplinary action by SFC – Don’t go too far in facilitating a share offer, retrieved May 1st, 2018, http://www.deacons.com.hk/news-and-insights/publications/lesson-learned-from-a-recent-disciplinary-action-by-sfc.html

[xxvi] HNA, History, retrieved May 1st, 2018, http://www.hnagroup.com/en-us/who-we-are/development-history/

[xxvii] Financial Times (2017, June 2nd), Who owns HNA, China’s most aggressive dealmaker?, retrieved May 3rd, 2018, https://www.ft.com/content/8acfe40e-410b-11e7-9d56-25f963e998b2

 [xxviii] Bloomberg (2017, August 2nd), The Conglomerate That Troubles China , retrieved May 1st, 2018, https://www.bloomberg.com/news/articles/2017-08-02/the-conglomerate-that-troubles-china

[xxix] Bloomberg (2017, August 2nd), The Conglomerate That Troubles China , retrieved May 1st, 2018, https://www.bloomberg.com/news/articles/2017-08-02/the-conglomerate-that-troubles-china

[xxx] Bloomberg (2018, January 5th), HNA Units Missed Payments to More Chinese Banks, retrieved May 1st, 2018, https://www.bloomberg.com/news/articles/2018-01-05/hna-units-are-said-to-have-missed-payments-to-more-chinese-banks-jc1t4qfi

[xxxi] Bloomberg (2018, January 24th), China’s Beleaguered HNA Group Faces a Debt Wall in Second Half, retrieved May 1st, 2018, https://www.bloomberg.com/news/articles/2018-01-24/china-s-beleaguered-hna-group-faces-a-debt-wall-in-second-half

[xxxii] CNN (2018, April 23rd), A major Chinese investor just cut its Deutsche Bank stake, retrieved May 1st, 2018, http://money.cnn.com/2018/04/23/news/companies/hna-trims-deutsche-bank-stake/index.html

[xxxiii] Bloomberg, (2018, April 5th), HNA Wants to Sell Its $6.5 Billion Hilton Stake, retrieved May 1st, 2018, https://www.bloomberg.com/news/articles/2018-04-05/hna-seeks-to-sell-hilton-stake-amid-global-property-selloff