Far East Orchard has entered a joint venture with Real Hospitality Group Asia (RHGA) for a hospitality management business in China, the Singapore-listed company said in a filing to SGX Friday.
“The tourism industry in the PRC had one of the largest domestic markets in the world pre-Covid-19, and is already showing signs of recovery during the pandemic. The board is of the view that this is a good time to enter the PRC market and grow the group’s global presence,” Far East Orchard said in the statement.
“RHG’s vast experience in managing third-party branded hotels allows the group to enter the PRC market with an experienced joint venture partner. As a result of the joint venture agreement, the group will also be able to leverage on RHGA’s existing setup in the PRC,” the company added.
Real Hospitality Group (RHG) operates more than 90 hotels in the U.S. under white label or franchised brands, the filing said, adding RHGA formed in 2020 to enter the China market.
The joint venture will be 40 percent owned by Far East Orchard’s subsidiary Far East Hospitality Management Asia (FEHMA), while RHGA will hold the remainder, the filing said.
Under the deal, the joint venture will be formed in Hong Kong and it will set up a wholly owned subsidiary in China, the filing said. FEHMA and RHGA will commit capital up to CNY3 million, or around S$645,000, in proportion to their shareholdings, the filing said.
Far East Hospitality Holdings, a subsidiary of Far East Orchard, will grant a license of selected hotel brands to the China subsidiary, which will operate and manage the hotels under the license on the mainland, the filing said. RHGA will support the China subsidiary with personnel under a shared services agreement, the filing said.