China's Ctrip-backed LvYue enters Indian hospitality market

LvYue Hotel Management, the strategic investment arm of Ctrip Group, is the latest Chinese company vying for a pie of the Indian hospitality market. Earlier this year, the company incorporated its India unit LvYue Hotel Management (India) Pvt Ltd, which is operating out of DLF Cyber City in Gurgaon.

LvYue is the second Chinese player in the Indian hospitality market after Jin Jiang International, which established a major footprint in the country with the acquisition of Sarovar Hotels & Resorts in 2016 via its European entity Louvre Hotels.

Industry sources told DNA Money that LvYue is currently scouting for properties in North India while simultaneously building its management team. "They are in the process of hiring key department heads for various management functions. The India unit is being led by a Chinese executive Jiaxi Song who is the chief executive officer of the company," said a source familiar with the development.

CHINESE INVASION

Over 500 – Properties LvYue Group has worldwide   Over 2,000 – Network its is eyeing by the end of 2019   2016 – The year in which LvYue Group was established

DNA Money could not reach Jiaxi Song, CEO, LvYue Hotel Management (India). Queries emailed to LvYue Group CEO Zhang Qiang remained unanswered till the time of going to print.

Established in 2016, the LvYue Group has built a portfolio of over 500 properties worldwide by 2018-end. It currently has three brands - Floral, Sucha and Vyluk, and its hotels are operational/under development in more than 60 destinations across 10 countries including China, Japan, South Korea, Thailand and Malaysia. The company is expecting its network to exceed 2,000 hotels by the end of this year.

While there is not much information about LvYue's India operations, DNA Money has learnt that the company has got one operational project in Sector 49, Gurugram. Christened 'Quite Good House', the 18-room property is listed as a three-star suite hotel on the online travel agency (OTA) Expedia. The guestrooms, accommodating two persons, are sold on the OTA platform in the price range of Rs 2,100 to Rs 2,200. The rates quoted are inclusive of breakfast, parking and internet but do not include taxes and service fees.

According to industry sources, LvYue is taking the long-term lease route to establish its initial footprint in India. At a later stage, the company management will also explore a combination of management contracts and franchise agreements to expand the network.

"Negotiations have been initiated by LvYue with at least five to six hotels for establishing initial footprint In the country. If the hotels are acquired through long-term lease strategy, it will not be very capital intensive. However, outright buying of hotel assets will require the company to make significant investments in the Indian hospitality market," said another source.

Ctrip is China's largest OTA and a leading provider of travel services including accommodation reservation, transportation ticketing, packaged tours and corporate travel management.

Just last month, OYO Jiudian, the Chinese subsidiary of Indian hospitality company OYO Hotels & Homes, entered into a strategic partnership with Ctrip for China market. It is unclear at this stage whether LvYue would also explore partnering OYO for its India operations.