Photo/Zhang Jian (NBD)

Feb.12 (NBD) -- Chinese e-commerce giant JD.com has acquired a 100 percent stake in Beijing Jade Palace Hotel for 2.7 billion yuan (398.4 million U.S. dollars) through a fully controlled subsidiary of Beijing Jingdong Century Trade Co Ltd whose legal representative is Richard Liu, founder of JD.com.

The deal quickly became a sensation among the industry and people speculated whether Liu would like to continue his dream of running a restaurant chain. In 1996 when Liu was still a university student, he bought a restaurant near his campus but it didn't manage to survive due to poor operation.

Additionally, technology companies are competing to empower the retail industry in recent years. Last year, Alibaba lunched unmanned hotels and restaurants and JD.com also lunched automated robot restaurant, which makes the speculation more reasonable.

However, it has nothing to do with the above mentioned reasons. When reached by NBD, the company said the purchase of the hotel serves JD.com's long-term development and the property will be transformed into a space mainly for technology innovation and business office.

JD Group CMO Xu Lei also said on social media that the headquarters of JD Group will remain unchanged. In addition to working space, the hotel will also be used to recruit IT talents.

It is noticed that technology companies have long been facing shortage of talents. Under such circumstances, improving working environment, such as better locations, becomes a means to attract talents for such companies.

Founded in 1998, the formerly five-star commercial hotel is located in the center of Haidian District, housing a batch of universities, including Beijing University and Tsinghua University, offering a natural talent pool for the company. In addition,it is where Zhongguancun Science Park resides.It can be noticed that the hotel is only hundreds meters away from the building of technology giant Tencent and news platform Jinri Toutiao. 

The hotel was once a prime choice for IT travelers and has received many honorable guests, but somehow ran into losses and became heavily debt-ridden. As of the end of September of last year, the hotel grossed 18.02 million yuan (2.7 million U.S. dollars) in revenue with net profit standing at -47.1 million yuan (-6.2 million U.S. dollars), according to its financial reports.

NBD paid a field visit and found that many companies have moved out of the building successively except one on the second floor. "It is a mess inside and the refurbish efforts somehow ended years ago," said a working personnel.

Based on opening filings, this is the second time that the hotel seeks for a buyer. It was sold at a starting price of 2.68 billion yuan (395.5 million U.S. dollars) and JD.com got it at 2.7 billion yuan. An industry insider believed that it is a good deal.

This might also offer a new way out for the hotel.

In the past two to three years, about 11 commercial buildings with a building area above 20,000 square meters, including 3 hotels, have been turned into office buildings in Beijing, according to a report of CBRE, the world's largest commercial real estate services firm, released in last September.

But some industry insiders are not bullish on the move as it is not suitable to change hotels into working space due to architecture features of hotels.

However, Jade Palace Hotel has a gene for breeding high-tech start-ups. For example, software company Kingsoft worked at the office building of the hotel in earlier years. Kingsoft Antivirus lunched press conferences at the hotel for many times. Moreover, it also witnessed the birth of Xiaomi.

But it is still time to tell whether the hotel will reborn.

Email: tanyuhan@nbd.com.cn