International law firm Berwin Leighton Paisner (BLP), who surveyed 300 industry professionals, also notes that Western Europe, in particular, will benefit from the majority of global investment due to its stable geopolitical environment.

 

Last year saw Chinese investors going from single asset buyers to portfolio players in Europe, the study shows. Easing measures on Chinese outbound investment, including the removal of the US$100 million threshold for outbound deals, is driving hotel Chinese acquisitions in the continent.

 

“The result of the (Chinese) government relaxing restrictions on outbound investments is that now, particularly compared to five years ago, Chinese companies are able to compete on a level playing field with other international players on these major overseas deals,” says Victoria Gardner, a partner in BLP’s Hong Kong office.

 

“Last year, outbound investment from China exceeded inbound investment for the first time and this trend will no doubt continue,” says Gardner. Hotels in Europe, particularly those with a strong global name, will be highly attractive for Chinese companies wanting to enter the market, she adds.

 

Last year, Jin Jiang International Holdings entered the international European market by acquiring  Groupe du Louvre. But there is no clearer indicator of Chinese investment appetite for the European hotel sector than Fosun International’s recent hard-won acquisition of the currently loss-making Club Med, Gardner says.

 

More than two thirds of the people surveyed believe hotels would outperform traditional commercial property investments in Europe in 2015 through 2016, with global transaction volumes reaching their highest levels since 2008. 

 

Over half of respondents predict that Western Europe will benefit from the majority of global investment this year due to the stable geopolitical environment that it offers. Supporting this, the flow of funds coming into Western Europe from China will likely continue.

 

Alongside this significant outbound trend, China itself is set to become the second largest travel and tourist economy after the United States by the end of 2015, according to a report by the World Travel & Tourism Council. 

 

World’s largest hoteliers including Hilton Group, JW Marriott and Sheraton have major expansion plans in China. InterContinental alone is investing in over 100 new hotels in the mainland in the next three years. International hotel groups are also broadening their horizons to look beyond the tier-one cities. Sofitel and JW Marriott are planning to open hotels in the cities of Guiyang, Wuxi and Foshan.

 

“There is a strong feeling among both local and international players that there is a need to capitalize on the domestic tourism demand in China. The competition is fierce, while slowing economic growth in China makes things even harder. Yet, those who get it right will see significant returns from the market,” says Gardner.