The economic slowdown in China is driving domestic firms to invest in US hotel real estate as they seek a stable market and high returns.
In a report, Asia Society observed, “Chinese investors are attracted to U.S. markets given [the higher] return potential, array of investment opportunities, economic and property market stability, strong foundation of property rights, and the sheer size and maturity of the market.”
The Rosen Consulting Group (RCG) also said Chinese commercial real estate acquisitions in the U.S. reached $17.1 billion from 2010 to 2015. Hotel investments amounted to $3.7 billion, or 21% of the total commercial real estate acquisitions.
The report also revealed that the impetus for the trend was the Chinese government’s policy that allowed insurance companies to invest up to 15% of their capital in offshore investments.
Among the more aggressive players are Anbang and Sunshine, both of which have acquired trophy hotels to add to their growing portfolio.
The report also enumerates the surge in Chines visitors to the US as another catalyst for the increased investment in the hospitality industry, especially in US gateway cities. The National Travel and Tourism Office reported that 2.19 million Chinese tourists visited the US in 2014, which is a 21% rise over the previous year. These visitors spent over $2 billion during their stay in the US.
Mid-market hotels currently are hot property as Chinese investors target the traveling middle class market from their home country.
