PRIVATE-EQUITY firm Prax Capital Management Co has announced plans to invest US$10 million in China's Blue Horizon Group, a leading hotel chain based in east China's Shandong Province.
Shanghai-based Prax Capital will be allowed one seat on Blue Horizon's board of directors, an official told Shanghai Daily yesterday.
This is the first time Prax Capital has invested in the hotel industry and its third foray in the consumer sector, said Jeff Yao, a managing partner.
It has previously invested in the Little Sheep Ltd, a restaurant chain, and Kelti (China), a skin-care salon chain operator.
The company believes hotels such Blue Horizen that target mid to high-end customers will be in more demand as incomes rise.
Blue Horizon runs 12 hotels and two restaurants in Shandong. It is to open two new hotels in Tianjin and Shanghai as it focuses on the east China coastal area.
Zhang Chunliang, chairman of Blue Horizon, said the group plans to become one of the top 10 domestic hotel chains by 2012 and a top-five hotel operator in the mid and high-end segment in 10 years.
Travel and entertainment sectors in China, including hotels and restaurants, are enjoying tremendous growth as a result of increasing disposable income.
A huge number of visitors from home and abroad had led to increasing demand in the hospitality market.
Statistics from China Tourism Bureau showed the total number of three-star hotels was 6,450 in 2006, up 12.8 percent from 2005 and spending on dining out increased 22.2 percent during the same period.