With Hilton stake, HNA deepens group synergies

China's diversified major HNA Group is seeking to expand its portfolio of hotels and strengthen the synergy between its aviation and hospitality businesses, by exploiting the boom in overseas travels of the Chinese.

To this end, HNA Group picked up a 25 percent stake in Hilton Worldwide Holdings Inc on Monday.

In the first half of this year, Chinese made 59.03 million trips abroad, up 4.3 percent year-on-year, according to the China National Tourism Administration data. That represents a tremendous opportunity for HNA, industry observers said.

The parent of Hainan Airlines Co Ltd, China's largest private airline, also has interests in shipping.

Hilton said in a statement on Monday that HNA bought the stake from its biggest shareholder Blackstone Group LP for $6.5 billion, or $26.25 per share, in cash.

The transaction is expected to close in the first quarter of 2017. Post-deal, Blackstone's stake will likely fall to around 21 percent, which could make HNA the single largest shareholder in Hilton.

The Hilton deal would boost the value of HNA's overseas assets, which is currently estimated to be more than 600 billion yuan ($90 billion).

HNA has stakes in, or operates, nearly 2,000 hotels globally, including various brands of luxury and business hotels. The investment in Hilton is expected to help it to increase its control over high-end hotel brands and luxury properties.

"By investing in Hilton, HNA can utilize the overseas networks of the hotel chain, and launch some high-end travel packages bundling flight tickets and hotel rooms. It can also bring a large number of customers to Hilton and help it to expand in the China market," said Lin Zhijie, an aviation industry analyst and columnist at Carnoc.com, one of China's largest civil aviation web portals.

In April, HNA agreed to acquire Minnesota-based Carlson Hotel Group, a global giant and the owner of the Radisson and Country Inns & Suites chains. HNA is also the biggest shareholder in Spanish hotelier NH Hotel Group SA.

Lin said HNA hopes its string of overseas acquisitions will connect the aviation and tourism industry chains. Besides, it plans to enhance its appeal as a one-stop travel service by offering air transport, travel agency services, hotels, finance, payment systems and related technologies.

HNA's Hilton stake deal, experts said, also appears to be part of its ongoing effort to expand in both domestic and overseas markets.