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Shanghai billionaire Guo Guangchang’s expansion into tourism and resorts over the years has seemed like a reasonable idea, given expected growth in travel and income in China. Guo’s flagship Fosun International and its tourism arm, Fosun Tourism, control Club Med and last year purchased hotel brands from Thomas Cook, one of the world’s oldest travel firms.
COVID-19 has wreaked havoc on the travel and hotel industry globally, however, and Fosun isn’t escaping the fallout. Fosun Tourism, which is about 81% owned by Fosun International, said on Friday evening it expects to lose 850 million yuan, or $121 million, to 1 billion yuan in the first six months of the year, owing to Covid-19.
The stock, which went public at the Hong Kong Stock Exchange in 2018 at HK$15.60 share, closed at HK$7 on Friday. That’s a hefty loss, though it has rebounded from HK$5.99 on March 19.
On the brighter side, Fosun Tourism says business is picking up (see announcement here); financially, it has cash and cash equivalents of 6.2 billion yuan, plus bank facilities of 2.2 billion yuan. Loans due in are 1.8 billion yuan.
Why does that matter, aside from keeping the business afloat? Guo has long been acquisitive, and the fall in hotel assets prices globally may open up opportunities to expand. Fosun Tourism itself said on Friday it’s “actively focusing on business development opportunities to achieve continuous and accelerated development of the group’s business.”
In related news, Beijing Capital International Airport said on Friday it expected to lose more than $100 million in the first half of 2020. (See post here.)
See related posts here:
Pandemic Will Spur Hotel Industry Consolidation
China’s Economic Recovery Unfolds
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@rflannerychina