The Orange County Register
Chinese Government Now Controls Local Resorts Ritz-Carlton, Montage, Loews Santa Monica
By Jonathan Lansner
The Chinese government has seized control of an insurance company that owns a collection of U.S. luxury hotels including Montage Laguna Beach in Laguna Beach, Ritz-Carlton Laguna Niguel in Dana Point and Loews Santa Monica.
China’s government on Friday, Feb. 23, announced the takeover of Anbang Insurance Group and said its company’s founder Wu Xiaohui would be prosecuted for financial crimes. Anbang was part of a group of fast-growing Chinese companies making high-profile real estate investments in recent years. China’s regulatory action confirms industry suspicions that Anbang’s bets may have been too risky.
Bloomberg News reported China’s insurance regulator says it plans to run Anbang and its $315 billion in assets for at least one year and the insurer’s operations remain “stable” and unspecified asset disposals are planned.
Anbang acquired its three Southern California luxury resorts in 2016 with its purchase of 15 of 16 hotels owned by Strategic Hotels & Resorts of Chicago. The original deal included the Hotel del Coronado in San Diego, but that resort was taken out of the acquisition due to U.S. security concerns.
Anbang’s most prominent purchase was buying New York’s famous Waldorf Astoria hotel in 2014. The insurer was briefly in controversial talks to create a real estate partnership with Jared Kushner, President Donald Trump’s son-in-law.
Ownership changes are not new in the local luxury report scene. In fact, the Montage was flipped three times in a two-year period. Strategic Hotels purchased Montage in 2015. Then Strategic soon sold itself to New York investors Blackstone. Then Blackstone sold Montage at other Strategic hotels to Anbang.
Most luxury resorts are run by the high-end hotel chain operators who are hired by owners to manage the day-to-day operations. So, any change in ownership frequently does not impact the guest experience, says Alan Reay, president of the Atlas Hospitality Group consultancy.
“You’d never know it was sold,” Reay says.
Chinese officials who will run Anbang may be tempted to sell the California hotels. Last year, California had 32 trophy hotels sales (price tag above $50 million), most in the nation — as per-room values hit a record high statewide, Atlas Hospitality reports.
But Reay wonders who’d have a big enough bankroll to acquire such a portfolio. “This list of potential buyers is short,” he says.