Dalian Wanda in $577m foray into tourism
Updated: 2015-07-04 08:34
By Hu Yuanyuan(HK Edition)
The business empire of mainland property baron Wang Jianlin - Asia's richest man - is extending its tentacles into the tourism industry, forking out nearly 3.6 billion yuan ($577 million) for a stake in LY.com - a leading travel-service provider that began operations on the mainland in 2004.
Wanda Culture Industry Group - a subsidiary of Wang's Dalian Wanda Group - signed a strategic investment deal in Beijing on Friday along with other co-investors, including Tencent Industrial Capital and CITIC Capital Holdings Ltd.
The total new investment to be injected into LY.com will exceed 6 billion yuan, marking the largest investment a domestic online travel company has received so far.
Following the investment, Wanda Culture Industry Group and LY.com will cooperate in opening up online channels of Dalian Wanda's tourism business, and LY.com will enjoy access to huge quantities of travel destination resources.
Dalian Wanda Group is already a major force in the cultural and entertainment sector as the world's largest movie-theater operator. The investment in LY.com will complement the group's more than a dozen mega cultural and tourism projects that are opening or under construction, with another eight similar projects due to come on stream within five years.
"By investing in LY.com, Wanda's tourism industry will consist of three major components - online platforms, offline channels and large travel destinations," said Wang, whose conglomerate's diversified interests range from real estate to shopping plazas, luxury hotels and cinema chains.
"We aim to build the world's sole O2O (offline-to-online) model in the tourism industry, accelerate the fulfillment of Wanda's target for its tourism industry and contribute to the transformation and upgrade of the mainland's tourism industry," he said.
Wang had said that Dalian Wanda's fourth transformation aims to raise the group's market value and profit to $200 billion and $10 billion, respectively, by 2020. The long-term goal is to reduce the percentage of property income to below 30 percent.
Real estate analysts regard Dalian Wanda's move as an attempt to cash in on the mainland's booming tourism sector and to partially deflect the stiff rivalry in the region's property market.
"Wanda has always wanted to transform itself due to the declining property market brought about by fierce competition on the mainland. With the rapid development of the economy, the travel industry is expanding at a rapid pace, allowing Wanda to step into this market," said Guo Yi, marketing director at Yahao Real Estate Selling & Consulting Solution Agency.
"Following this investment, Wanda can combine the online resources of LY.com with its own tourism projects to create a new tourism value chain."
LY.com is one of the mainland's top online travel-service companies, specializing in the scenic spot ticket reservation market. Last year, it served about 30 million people, representing a 100-percent increase over 2013.
"Following Wanda's latest strategic investment, LY.com will give primacy to working with Wanda's travel agencies, Wanda's cultural and tourism cities as well as Wanda's offline commercial resources, and will jointly build the innovative 'Internet Plus' model in the tourism industry," said Wu Zhixiang, chief executive officer and founder of LY.com.
Tian Siqi contributed to the story.
Tourists are seen through an ornamental gate at the Palace Museum, or the Forbidden City, in Beijing. Following a 3.6-billion-yuan investment in LY.com, Wanda Culture Industry Group will move to open up online channels of its parent Dalian Wanda's tourism business. Raul Vasquez / Bloomberg
(HK Edition 07/04/2015 page7)