Chinese developer buys LA Marriott
Updated: 2014-12-22 12:30
By Lian Zi in San Francisco(China Daily USA)
Chinese developers seeking higher returns on their investments are snapping up hotel properties in US cities.
The latest acquisition was made by XLD Group, a US subsidiary of China-based Sichuan Xinglida Group, which purchased the 1,004-room Los Angeles Airport Marriott for $160 million on Tuesday.The Airport Marriott, completed in 1972, is one of the largest hotels in Los Angeles County.
The seller was DiamondRock Hospitality Co, a Bethesda, Maryland real estate investment trust that owns 27 hotels with more than 10,500 rooms.
Mark W. Brugger, president of DiamondRock Hospitality, said in a press release: "The sale of the Los Angeles Airport Marriott achieves the company's goal of strategically recycling capital from non-core assets into high-growth, high-quality assets. This transaction improves the overall quality of our portfolio and increases our brand diversity."
Eddy Chao, president of Asia Pacific Capital, who represented the buyer,believesit is a smart move by XLD andexpects to seea yield of more than 8% in the next several years, as the lodging demand of travelers continues to grow.
According to the Los Angeles International Airport website, total passenger traffic (defined as passengers enplaned plus passengers deplaned plus direct-transit passengers) reached 59.4 million from January to October in 2014, up 6.31% from the same period last year, keeping hotels nearby well-booked.
"More than 90% of the Airport Marriott's rooms are occupied on an average night," said Chao.
Chao also told China Daily that the company would make substantial improvements to the building.
"About $35 million worth of improvements are coming to the hotel in the next two years,"Chao said."Meeting rooms on the top floor will be eliminated to create a new "executive floor," Chao said, where guestscould have their breakfast.Also, the hotel will have more suite-style rooms.
The deal for theMarriott Airport Hotel is not the only high-profileChinese hotel purchase in US these years.
In late 2013, the XLD Group bought the 487-room, 17-story Marriott Hotel in Torrance for $74 million.
Almost the same time,Chinese real estate developer Hazens Investment completed the acquisition of the Sheraton Gateway Hotel in Los Angeles for $96 million.
In October, China's Anbang Insurance Group acquired the famous Waldorf Astoria hotel in New York from Hilton Worldwide Holdings for $1.95 billion,making it the biggest Chinese property purchase in the US.
In December, Chinese real estate giant Dalian Wanda Group announced it would invest $900 million in a riverfront residential and hotel tower in Chicago.
"Chinese developers started to invest in the US hospitality industry because theChinese domestic real estate market has been cooled down, and the travel activities remain strong in the US market," Chao said.
From January to September, there were 56.4 million non-resident travelers to the US, and the US Commerce Department projects annual growth of 4% in international travel.
China is preparing to send millions of leisure travelers and businesspersons into the international tourism market with the new 10-year visa agreement between China and the US, Chao said.
However, not all business insiders are as optimistic about investing in hotel properties.
"The price looks too high right now to purchase a hotel in the US," Li Zhenzhen, a commercial real estate developer in the San Francisco Bay Area.
(China Daily USA 12/22/2014 page1)