In late 2016 it was announced that HNA Group would be buying a roughly 25% stake in Hilton from Blackstone, for a price of about $6.5 billion. HNA Group is a Chinese conglomerate that owns companies in various industries, especially the tourism sector.
HNA Group has stakes in about a dozen Chinese airlines (including Hainan Airlines), Hilton, and Carlson, just to give a few examples. The company has been in deep financial trouble for the past several months. The company’s chairman describes these problems as arising because they made a big number of mergers in a short period, and because they’ve transitioned from rapid to moderate growth, which has impacted their access to new financing. With rate hikes by the federal reserve, this has caused a liquidity shortage for many Chinese businesses, including HNA Group.
This liquidity shortage has turned into a crisis for some of HNA Group’s airlines, as they haven’t been able to make lease payments, and in some cases are even unable to pay for jet fuel.
To most, HNA Group is a bit of a mystery, with limited information regarding who is behind the company, and where they’re getting all their money from.
In a move that certainly won’t do anything to further peoples’ confidence in HNA Group, the company has announced that they plan to sell some or all of their stake in Hilton. The company owns a 26.1% stake in the hotel giant, making them Hilton’s largest shareholder. When HNA’s investment was first announced, their stated purpose was as follows:
“This investment is consistent with our strategy to enhance our global tourism business, and we look forward to working together on new initiatives that leverage our respective strengths, expertise and tourism platforms to provide travelers more choice, value and world-class services.”
While there was perhaps a long term plan to connect their various businesses somewhat, we didn’t see many changes to Hilton since they finalized their stake. A 26.1% stake is a big sale, so I’m curious to see what goes down here. We’ve seen a lot of consolidation in the hotel industry the past few years, and I’ll be curious to see if this once again leads to further merger speculation, or if we’ll simply see an outside company come in and invest, given that HNA seems to be in a bind.