Spending 20 billion to buy dozens of hotels, I thought I was getting an advantage, but what happened?

As we all know, R&F Group spent nearly 20 billion yuan to acquire 77 hotel businesses under Wanda Group the year before last. After bringing these hotels under its ownership, R&F Group has reached 100 hotels, making it the largest hotel in the world. One of the largest hotel companies.

After Wang Jianlin sold off part of Wanda’s assets, he began to focus on developing the company’s light asset model and is gradually withdrawing from the commercial real estate industry. We know that Wang Jianlin was very high-profile in the first two years and always occupied the headlines of major media. But now Wang Jianlin seems to have kept a much lower profile, and there is very little news about him. After R&F Group and Sunac bought Wanda's assets, they felt happy because they took advantage of them. This was also because Wang Jianlin had to sell them at a discount in order to reduce debt.

It’s just that Sun Hongbin wanted to buy Wanda’s cultural tourism project and didn’t want to take over the hotel business, so he later transferred the hotel to R&F Group at a 40% discount, which was better than when Sunac took over Wanda Hotels. It was more than 10 billion yuan cheaper at that time, which gave R&F Group a huge advantage. However, two years have passed. How is the situation of R&F's hotels?

In fact, many people were not optimistic about R&F taking over Wanda Hotel, but the price of 20 billion was indeed a great temptation for R&F. R&F Group has included the hotel business into the group's net assets, and the annual profits can be included in the group's profits. In 2018, the valuation of these 77 hotels exceeded 32 billion yuan. R&F stated that it will not deliberately increase construction costs after acquiring the hotel, but will directly operate it and generate profits.

In 2017, R&F Group’s net profit reached 25 billion, and these 77 hotels have become one of the important sources of the group’s income. After the transaction with Wanda Group, these hotels helped R&F become one of the world's largest hotel companies, and increased the value of the group's office buildings and other industries to 32.5 billion yuan, while also reducing a lot of debt. However, although these hotels have driven R&F's economic growth, their own profits are not impressive. In 2018, R&F Hotel's turnover was only 7 billion.

What is even more noteworthy is that although the revenue of the hotel business is increasing, its profits have continued to decline and even suffered losses. In 2016, R&F's hotel business suffered a loss of 150 million, and in 2017, the loss increased to 400 million. And this status has been maintained for 5 years. According to industry insiders, the reason for the sluggish hotel business of R&F Group is marketing problems and the lack of timely improvements in operating methods. Another reason is that the overall environment of China's hotel industry is sluggish.

It can be said that Sun Hongbin did have some foresight when he passed the blame to R&F, but R&F can only bite the bullet and develop now. In fact, R&F Real Estate's current problems are more serious. The biggest problem is the debt problem.

R&F Real Estate’s total liabilities exceeded 290 billion last year, and its total debt ratio was as high as 80. In 2019, R&F Real Estate’s liabilities are still increasing. In addition, R&F Group's sales are not satisfactory. According to the current situation of the real estate market, it is not easy for R&F Group to recover in a short period of time. This situation has a lot to do with the insufficient prediction of the acquisition of Wanda Hotel that year.

Spending 20 billion to buy dozens of hotels, I thought I was getting an advantage, but instead I lost 400 million a year and had hundreds of billions in debt. Now Wang Jianlin has led Wanda Group to restart a new round of development, while Li Silian of R&F Group is overwhelmed by huge debts. For a real estate company, such a high debt ratio is indeed very dangerous. Whether R&F Group can get out of trouble in the future, we can only wait and see.