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The Chinese insurance conglomerate that pulled out of a $14 billion bid for Marriott Hotels in April is reportedly back in the hunt for an international hotel chain, this time, a potential £7 billion (US$9.1 billion) bid for InterContinental Hotel Group.
The Sunday Times reports that City bankers held preliminary talks with Anbang concerning a possible bid for the operator of the Crown Plaza, Holiday Inn, and InterContinental brands. Anbang first gained mainstream attention in the US after its $1.9 billion purchase of New York's Waldorf Astoria hotel and the recent $6.5 billion acquisition of Strategic Hotels & Resorts Inc, in April (deal yet to close).
Anbang has denied the reports through a spokesperson while IHG has refused to comment. But with Anbang's aggressive forays into the hotel market over the last couple of years, I don't think Anbang's denial holds that much weight.
Although Anbang claimed ‘market considerations' were behind it walking away from the Marriott deal. Speculation over the dropped bid has since centered around Chinese restrictions on foreign takeovers and the potential scrutiny of US financial regulators.
Is IHG in the market?
Hotel industry consolidation doesn't appear to be slowing following Marriott's successful bid for Starwood, with most big international chains in a continuous cycle of acquiring assets or being on the radar of potential purchasers by cashed-up rivals. IHG reportedly rejected a takeover bid from Wyndham Worldwide in 2014 and then survived hedge fund Marcato's activist push for a sale.
The news follows strong growth at IHG over the previous year with a 2% rise in operating profit over the six months to June 30, even in the face of an 8% drop in sales, making IHG a strong contender for potential suitors.
How would an IHG sale affect IHG Rewards Club Members?
Much the same as its attempted purchase of Starwood, Anbang buying IHG would most likely be a win for IHG Rewards Club members. As opposed to the compromise's SPG members are staring at shortly with integration into Marriott Rewards, and the consolidation of brands. Anbang has a $34 billion bankroll to invest and is looking to cash in on the booming Chinese tourism industry through rapid expansion, which could lead to a host of new offerings and growth in the IHG program.
Final Thoughts
We're not big fans of industry consolidation as loyalty members. As an IHG Rewards Club member, we would rather see InterContinental purchased by Anbang than another hotel chain looking to consolidate brands and roll rewards programs together at the expense of members.
This likely won't be the last time we'll be reporting on this story so stay tuned for future developments.
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