On March 31, China’s Anbang Insurance Group Co ended its move to add Starwood Hotels & Resorts Worldwide Inc to its assets, withdrawing its US$14 billion (C$18 billion) offer for the chain. Maryland-based Marriot International had offered US$400 million less than Anbang, which two years ago purchased the Waldorf Astoria New York hotel for nearly US$2 billion.
While Anbang had been actively pursuing the Starwood deal, the Chinese company may have withdrawn its offer due to running afoul of Chinese Insurance Regulatory Commission limits on the size of overseas transactions, a move which could have dampening effects on the attractiveness of Chinese bidders in a year which has already seen multiple high-profile Chinese deals. Still, Anbang was able to complete a US$3 million purchase of German insurer Allianz’s troubled South Korean operations on April 6, operations which had caused Allianz to lose €51 million (C$72 million) in 2014, and €244 million in 2015.
American real estate and hotels have seen large amounts of Chinese interest, with purchases increasing 68% between 2014 and 2015, or from US$3.05 billion to US$5.13 billion, according to the Rhodium Group. The increase is even more pronounced when compared with earlier years: only US$195 million, through four deals, of Chinese investment into real estate occurred in 2012, a far cry from the 39 deals last year. Instead, US$3.1 billion went into energy, and US$2.62 billion into entertainment in 2012. Interest in hotels may be in part due to China’s growth in tourism, with a China Luxury Advisors and Fung Business Intelligence Centre report last year highlighting that Chinese international tourists are expected to number 234 million and spend US$422 billion in 2020.
Starwood Hotels and Resorts has hotels around the world, with 186,138 rooms in North America, 57,283 in Greater China, 41,067 in the rest of Asia, 40,155 in Europe, 24,405 in Africa and the Middle East, and 20,198 in Latin America. Anbang’s assets are currently valued at around US$25 billion, a significant increase from the US$75 million it had in 2004. The firm has been very active in 2016, with Chicago-based Strategic Hotels and Resorts, which operates the Loews, Four Seasons, Ritz-Carlton, and InterContinental brands of luxury hotels, purchased by Anbang in March for US$6.5 billion. Anbang has also been active in Canada, having purchased a 66% stake in the four towers comprising Vancouver’s Bentall Centre for a reported C$1 billion on February 19.