China Lodging Group Ltd. one of the China's top hotel companies, agreed in acquiring Crystal Orange, a boutique hotel operator for 3.65 billion yuan. This is the latest sign of consolidation in the fragmented hotel industry.
China Lodging has been buying an array of smaller brands over the last five years in order to complement its HanTing budget brand. This made the company the biggest consolidators of its sector.
Although the company did not provide additional details regarding this acquisition, it said that it will discuss the specifics on an upcoming earnings call that is set on March 14.
The shares of China Lodging have doubled over the last year. After announcing its plan to acquire Crystal Orange, their share grew more by about 1.2 percent.
The acquisition will give the company Crystal Orange's portfolio of more than 100 hotels that are located in first and second-tier cities throughout the country.
China Lodging also has a major strategic relationship with Accor, the world's leading hotel operator. This strategic relationship gave China Lodging major franchising rights to both Mercure and Ibis brands.
Accor currently owns 11 percent of China Lodging.
China is currently one of the world's largest hotel markets as it attracts most of the world's biggest operators such as U.S. giant Marriott International Inc., France's AccorHotels, and Britain's InterContintental Hotels Group PLC.
According to Euromonitor, a data tracking firm, the hotel market grew at double-digit rates at 2012 but slowed sharply in the last 2 years due to China's slowing economy. The market grew only by 2.3 percent in 2014-2015.
Although China Lodging and its rival Homeinns Hotel and Management Co. Ltd. were the two leading players in 2015, they only controlled 4 percent of the overall global market.
Shanghai Jin Jiang Holdings Co.Ltd., another major local player, became the market's largest company last year after buying a stake of Plateno. This made the company control 6 percent of the current market.