China Tourist

Room to grow

‘Everything app’ Meituan buys stake in hotel chain Dossen International


Meituan: checking in to hotels

When Vivion Group, a real estate company controlled by Israeli tycoon Amir Dayan, first tapped the debt market in 2019, investors were attracted by the prime assets it owned. Over half of its portfolio was branded hotels in the UK, including the Sanderson and St Martins Lane hotels in London’s West End, and the Hilton, Crowne Plaza and Holiday Inn chains across the country. But when Covid-19 hit, so was the value of these properties. Vivion’s bonds became the most-shorted European credit this week, with 16% of holders looking to profit from declines in prices.

Hotel assets in China are being valued much more positively. The collapse of international travel has led to a boom in domestic holidays. Guest accommodation have become sought-after assets, especially for longer-term investors looking to buy the dips. One of them is the ‘everything app’ Meituan, which is reported to be in talks to acquire a 20% stake in Dossen International Group, a Guangzhou-based boutique hospitality chain, for Rmb1 billion ($154 million).

Established in 2006, Dossen is currently the sixth-largest domestic hotel group in China, with over 155,000 rooms, according to data from the China Hotel Association. Owning 15 hotel brands, mainly middling players with presences in central and southern China, the company also has a customer database of over 35 million people.

For those who have been tracking Meituan’s progress, the deal should not come as a major surprise. It has offered hotel booking services since 2016 as part of an early diversification from food delivery, its initial focus. The Beijing-based app, which targeted the low-end market initially, superseded as China’s largest online travel agency by room night bookings in 2018, according to Trustdata, a local mobile app tracker. (By gross merchandise volume,, which dominates the high-end market, still holds the lead.) Although hotel bookings by room nights on Meituan fell 19% (on the year) to 78 million in the three months to June last year (because of the coronavirus outbreak) its hotel and travel business displaced food delivery as its largest income contributor, bringing 42% of Meituan’s sales, versus 26% two years prior.

Commentators say that success has emboldened Meituan to expand its drive into the hotel industry. Apart from trying out vertical integration across the supply chain, it is also moving into the higher-end segment, which is expected to secure a bigger share of China’s hotel market as income levels rise.

At present the ratio of luxury, mid-to-high-end and budget hotels by room numbers is 1:3:6. Assuming the relationship evolves to something closer to developed countries, the mid-to-high-end market will enjoy a growth spurt, forecasts Dongxing Securities. That translates to a 76% increase in the number of mid-to-high-end hotel rooms to over 88 million in the medium term.

“The [Dossen] transaction reflects the intensification of competition among online travel agencies,” Zhao Huanyan, a senior economist at Huamei, a Shenzhen-based hotel consultancy, told TMT Post.

Tongcheng-Elong, a Suzhou-based online travel agency backed by Tencent and, said it would be acquiring the Changsha-based hotel chain Bolin early this month as well. is active on other fronts. Rezen, a hotel management company that it launched in 2018, inked a partnership with Chow Tai Fook’s Rosewood Hotel Group in December with a view to accelerating the brand’s expansion in China. Huazhu Group, 7.4% owned by, is also planning to grow its high-end portfolio to 500 hotels by 2023, building 100 upscale properties every year for the next three years.

Nasdaq-listed Huazhu and are both preparing for secondary listings in Hong Kong – embarking on fundraisings that will tap into record volumes of liquidity coming into the city from mainland investors via the Stock Connect scheme. The flows have pushed Meituan’s Hong Kong-listed shares to a record high this week too, lifting its market capitalisation to above $300 billion.

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