Huazhu Expands into the Middle East

Consumer Staples Author: EqualOcean News May 23, 2024 04:32 PM (GMT+8)

This week, Huazhu Group announced plans to expand into the Middle Eastern market, with the first stops being Saudi Arabia and the UAE. All Seasons Hotels plans to open its first hotel in Saudi Arabia and aims to reach at least ten hotels in the next three years. Simultaneously, Huazhu is actively seeking partners in the UAE to jointly develop multiple hotel projects.

Notably, Huazhu's international expansion is not a spur-of-the-moment decision. As early as March this year, Huazhu rebranded Deutsche Hospitality (DH), which it acquired in 2019, as Huazhu International, making All Seasons Hotels a new member of this international brand. In his book "Founder's Notes," Huazhu Group founder Qi Ji wrote, "Beyond China, Huazhu must have a larger footprint, which is globalization." Now, this vision is becoming a reality.

On July 4th, Huazhu Group appointed Deutsche Hospitality CEO Oliver Bonke as CEO of Huazhu International and Choon Wah Wong as Managing Director of Deutsche Hospitality and Senior Vice President of Finance at Huazhu International. Oliver Bonke previously served as Chief Commercial Officer at the American luxury hotel group Loews Hotels & Co. Choon Wah Wong, a former executive at Shangri-La, was responsible for development in the Middle East, Europe, India, and the Americas. These appointments demonstrate Huazhu's commitment to its global strategy.

Why has "globalization" become a key driver for the next phase of growth in the domestic hotel industry? On one hand, competition within China's hotel industry has intensified, with the mid-to-high-end chain hotel market shifting from a blue ocean to a red ocean. Research indicates that the domestic hotel industry is transitioning from an incremental market to a stock market, with new hotel properties accounting for only 10%, while the renovation of existing hotels accounts for 58%. Issues such as brand homogenization and off-season price wars compel domestic hotel brands to seek new development paths.

On the other hand, market demand in regions such as the Middle East and Indonesia is steadily increasing. For instance, Huazhu International recently signed an agreement for the construction of a new Steigenberger resort on Lake Qarun in Egypt, expected to open by the end of 2025. Huazhu International also announced the opening of an IntercityHotel in Muscat, Oman, its fourth IntercityHotel in Oman and sixth in the Middle East and Indonesia. Saudi Arabia's national transformation plan and the rise of Gulf states bolster Huazhu's international strategy.