HNA Group, the parent company of Hainan Airlines, has paid 431.6million euros ($620million) for a 20 percent stake in Spain's NH Hoteles, a step for the Chinese investor to expand its business in Europe.
The deal signed Monday in Spain makes HNA the second largest shareholder in the Spanish company, according to a statement emailed by NH Hoteles to the Global Times on Thursday.
NH Hoteles' shares on the Madrid Stock Exchange declined 2.05 percent to 5.72 euros ($8.10) per share Wednesday following the announcement of the deal.
The two companies also plan to create a hotel group in China that will give NH Hoteles access to one of the world's fastest-growing tourism markets. "Working in partnership with a local group that is a major player in the Chinese market is helpful," NH Hoteles said in its statement.

"The deal will help Hainan Airlines to expand air routes in Spain, which is very attractive for Chinese tourists," Li Xiaojin, a professor with the Civil Aviation University of China, told the Global Times on Thursday.

Hainan Airlines already has air routes in Europe, including flights from Beijing to Berlin, Budapest and Brussels.

Li said the deal would help HNA to broaden its business scope, since the profit margin for the domestic airline industry is quite small. "In the past 10 years, domestic airlines' average profit margin has only been around 2 percent, and it will fall further because of the soaring oil prices. Diversifying its business could improve HNA's capital strength," Li said.

Although air transportation is HNA's core business, the company is also involved in other areas of tourism, including airport management, logistics, hotel management, retailing and finance.

There have been some concerns about the financial risk of the investment given the current precarious economic conditions in Spain, which is still struggling to recover from the global financial crisis.

But Li said the investment made sense, since the deal will also help to channel growing numbers of Chinese tourists to European countries.

Lei Xiang, a 27-year-old Chinese student at Universidad Complutense de Madrid, told the Global Times on Thursday that NH Hoteles have a good reputation in Spain. "Many Chinese tourists and businessmen I know here choose the brand," she said.

NH Hoteles runs 400 moderately priced hotels in 25 countries, mainly in Europe, Latin America and Africa.
SOURCE: Global Times


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