Listed two years to delist, Kaiyuan Hotel dissatisfied with valuation?

After being offered by Sequoia Capital and gulling investment in January this year, Kaiyuan Hotel finally started the process of privatization. On April 18, after learning that Kaiyuan Hotel officially started the delisting process, a reporter from Beijing business daily contacted Kaiyuan hotel group. The relevant person in charge of the group said that further information would have to wait for the company to disclose. For the current development of the company, it was still in accordance with the original plan strategy. Industry insiders believe that Kaiyuan Hotel, known as “the largest private high star hotel in China”, was privatized just two years after its listing, which may be related to its unsatisfactory valuation. Nowadays, when both Huazhu and Jinjiang are making efforts in the Chinese market, how Kaiyuan will compete with other hotel groups after delisting has also attracted the attention of the industry.

Start privatization process

Kaiyuan Hotel, which has just been listed for less than two years, has started its privatization and delisting process. According to the announcement issued by Kaiyuan Hotel, Kaiyuan Hotel announced that it will delist on May 24. After 14 years of running, Kaiyuan hotel was officially listed on the Hong Kong Stock Exchange on March 11, 2019. The privatization deal will be concluded within a few months.

The announcement also shows that Kaiyuan hotel has applied for delisting in accordance with rule 6.12 of the listing rules. It is expected that H shares will voluntarily delist from the stock exchange at 9:00 a.m. on Monday, May 24, 2021. Only after any conditions for delisting from the stock exchange have been reached and the regulatory approval required for delisting has been obtained, can the H shares be put into practice. At the same time, Kaiyuan hotel will also inform the H-share shareholders of the latest trading date and the effective date of delisting in the form of announcement. Beijing Business Daily also learned that in January, Kaiyuan hotel was offered by Sequoia Capital and gulling investment.

It is reported that Kaiyuan Hotel started from Xiaoshan Hotel, Kaiyuan, Zhejiang Province, which opened in 1988. It was founded in December 2008. At present, the group owns 12 brands, including Kaiyuan Mingdu, Kaiyuan Resort and Kaiyuan hotel. At the same time, it also introduces Ctrip and green hotel as cornerstone investors.

In the view of industry insiders, for a period of time in the past, Kaiyuan hotel was biased towards traditional industries, with limited room for stock price rise. In addition, due to the impact of the epidemic in the past year, its performance has fluctuated. Now, it has been privatized just two years after its listing. It remains to be further observed how the future “money scene” of Kaiyuan hotel will be.

Behind Zheng Nanyan’s plate

At that time, Kaiyuan hotel group, known as “the largest private high star hotel in China”, was privatized just two years after its listing. In this regard, some industry insiders pointed out that the delisting of Kaiyuan hotel is closely related to the unsatisfactory valuation and the traditional development.

It is understood that after the delisting is officially completed, some senior managers of Kaiyuan hotel may withdraw, and Zheng Nanyan, the investment partner of Ouling, will take over Kaiyuan and serve as the chairman and President of Kaiyuan Hotel, who will be directly in charge of the middle end hotels and members, it and brands. This also means that when Zheng Nanyan returns, Chen Miaolin, founder of Kaiyuan Hotel, may face retirement.

Kaiyuan Group has spent nearly ten years to operate since it entered the middle end hotel market, but its proportion in scale is just over 50%, which is far behind a large number of “latecomers” of middle end hotels. Chen Miaolin said that it is very important for middle end hotels to speed up the volume, because if there is not a certain number of hotels, it means that the brand and market have not been built, and the potential of members and platform construction will not be released.

Zhao Huanyan, chief knowledge officer and senior economist of Huamei hotel consulting agency, pointed out that in terms of the previous situation, the share price of Kaiyuan hotel is not very satisfactory, which is mainly due to the fact that Kaiyuan hotel is biased towards traditional industries, slow development and limited valuation. This time, Kaiyuan Hotel withdrew from the capital market because it was acquired, and the main body of the acquisition is private equity. Its purpose is to change its original development track with the power of capital, so as to achieve faster development and achieve greater valuation.

Promote the development of mid market?

In the middle end market besieged by hotel giants, Kaiyuan Hotel, which is separated from the capital market, is also concerned about its future direction and whether it can continue its original development path and gain a place in the industry. Although Kaiyuan hotel is still advancing according to the original plan strategy, whether there are other adjustments after delisting in the future will also affect its development trajectory.

According to public information, Zheng Nanyan was the founder of 7-day hotel. After setting up the platinum hotel group with Carlyle investment group and Sequoia Capital, he announced that he had officially completed the privatization acquisition of 7-day hotel chain. Since then, Platinum Hotel was acquired by Jinjiang International Group. This time, Zheng Nanyan will return to the “river’s Lake” and open the “unlimited plus” mode: “Baida House + Kaiyuan + Longteng + walnut + Rubik’s cube +…” Zheng Nanyan said, “in the future, we will continue to improve the company’s management strength, and first promote the development of the middle end hotel network and membership system, so as to provide better quality products and services.”.

At the same time, the relevant organizational structure of Kaiyuan hotel will also be adjusted, focusing on strategic development and other core business. According to the financial report, there are 432 open and to be opened hotels in Kaiyuan Hotel, accounting for more than 70% of the total number of open and to be opened hotels.

However, in Zhao Huanyan’s view, Kaiyuan hotel has been developing more traditional, and its brand gene is difficult to change in the short term. However, it can also be changed by other means, that is, how to change the current situation of the layout of Zhejiang Province, so as to achieve faster development in the whole country.

In addition, some people in the industry are worried about the future development of Kaiyuan hotel. “In the face of the strong attack of powerful rivals Huazhu and Jinjiang in accelerating the layout in China, how to deal with Kaiyuan hotel is also thought-provoking.”. It is understood that Jinjiang hotel will achieve the goal of signing 10000 new hotels in Jinjiang China and opening 7000 new hotels in the next three years. Coincidentally, Huazhu is also full of confidence in its development in 2021. According to the data, there are 2449 hotels to be opened in China, and more attention will be paid to quality in the future. It is not difficult to see that the challenge facing Kaiyuan is not just the quantity.

China a space for one person in China’s hotel industry, Gu Huimin, Dean of the school of tourism science, Beijing International Studies University, believes that, at present, if Chinese enterprises do not go out and only develop locally, it will not be a problem to take the brand power of Kaiyuan plus Zheng Nanyan’s personal influence to occupy a place in the Chinese hotel industry. In the future, if Kaiyuan continues to take the middle end hotel line, it does not need to invest heavy assets, so capital is not the main problem for Kaiyuan to compete with other hotel giants. What is important is that in the future market competition, whether Kaiyuan can find its own way still depends on how it adjusts its strategy.

Beijing Business Daily reporter Guan Zichen intern reporter Wu Qiyun

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