(Yicai) April 18 -- Tongcheng Travel Holdings, a Chinese online travel services provider, has agreed to acquire Wanda Hotel Management Hong Kong for about CNY2.5 billion (USD342 million), beefing up its hotel assets and competitiveness.

Tongcheng and Wanda Hotel Development, the parent company of Wanda Hotel Management, announced the deal in separate statements late yesterday.

"Though its main business is online travel booking, Tongcheng has already ventured into hotel services," Zhao Huanyan, a senior tourism industry analyst, told Yicai. "The acquisition will further strengthen its hotel service offerings.”

Suzhou-based Tongcheng’s hotel brands focus on the mid-range and economy segments, while Wanda Hotel Management mainly focuses on the premium segment, including nine brands spanning the mid-level to luxury tiers.

Competition in the online travel industry has evolved beyond price wars and now centers on resource integration and comprehensive capabilities, Zhao noted. By consolidating upstream and downstream assets, such as hotels and tourist attractions, Tongcheng can enhance its competitive edge and expand its market share, he added.

Beijing-based Wanda Group has sold many core assets in recent years to improve its financial position, including commercial properties such as Wanda Plaza shopping malls.

The proceeds of the sale will be used for dividend payments, helping Wanda Group deleverage and optimize its asset-liability structure, said Wanda Hotel Development, which is an asset-light business in hotel design, construction, and management.

The deal only involves hotel management operations, with Wanda Group retaining ownership of the properties and continuing to collaborate with Tongcheng, it added.

Wanda Hotel Management had 204 hotels with more than 40,200 rooms as of Dec. 31 as well as another 376 hotels signed but not yet open, its parent said. The unit’s revenue topped HKD890 million (USD122 million) last year.

Tongcheng’s shares [HKG: 0780] closed 0.7 percent lower at HKD22.25 (USD2.87) apiece in Hong Kong today, while Wanda Hotel Development [HKG: 0169] plunged 6.1 percent to 46 Hong Kong cents (6 US cents). The bourse is closed today in observance of Good Friday.

Editor: Martin Kadiev