Starwood Capital enters the Chinese hospitality market

The Greenwich-based private equity real estate firm is teaming up with China’s largest hotel operator to develop hospitality projects in the country.

Greenwich-based Starwood Capital is investing $30 million (€22.5 million) in Shanghai Jin Jiang International Hotels in the private equity firm’s first major investment in China.

With 263 hotels in its portfolio, publicly listed Jin Jiang is considered by many to be the largest operator in the Chinese hotel sector. With its investment, Starwood will be the largest outside investor in the company with around a 10 percent stake in the company.  

“By combining Jin Jiang’s portfolio, which features irreplaceable hotels in Shanghai and other major Chinese cities, with our track record of creating global brands and enhancing asset value in both the luxury and budget categories, the partnership has the potential to create significant value for both companies going forward,” Barry Sternlicht, the private equity real estate firm’s founder, chairman and chief executive officer, said in a statement. He also noted that increased business travel and a growing tourism trade is fueling the growth in the Chinese hotel industry.

Last week, Jin Jiang held an initial public offering on the stock exchange in Hong Kong. The company issued 1.1 billion shares of stock and raised to raise HK$2.4 billion ($311 million; €243 million). According to the English-langue Shanghai Daily newspaper, the firm will use HK$494.8 million to refurbish its luxury hotel properties in Shanghai.

Prior to its IPO, Jin Jiang was wholly owned by the government of Shanghai. The company owns a large budget hotel chain in China, with 160 properties under the rapidly expanding Jin Jiang Inn banner. It also owns big-city luxury hotels like the Jin Jiang Hotel, Peace Hotel, Metropole and Pacific Hotel in Shanghai, as well as the Kunlun Hotel in Beijing.

The move comes as Starwood has been expanding into emerging markets. Last month, Sternlicht said that the firm planned to spend around $500 million in India.