Hilton Hotels Corporation, RREEF (the real estate and infrastructure investment management arm of the Deutsche Bank Group) and private equity firm H&Q Asia Pacific (H&QAP) intented to form an alliance to initially introduce more than 20 focused service hotels across China.

Hilton Hotels Corporation, RREEF and H&QAP have signed a Letter of Understanding for RREEF and H&QAP to form a partnership to acquire, develop and convert sites for around 5,000 new rooms under Hilton`s burgeoning focused service hotel brand, Hilton Garden Inn. Hilton Hotels Corporation would subsequently provide expertise in site selection, development, training, operations support, brand management and marketing.

Locations being considered for the hotels include, but are not limited to Shanghai, Beijing, Tianjin and key urban centres within the Yangtze River Delta and Bohai Bay regions. These regions represent many of the faster growing economies in China.

According to Ian Carter, executive vice president, Hilton Hotels Corporation and CEO of international operations, China represents an attractive, large and rapidly growing market for this brand.

China is an outstanding market whose booming economy and growing tourism both domestically and in-bound will ensure a strong demand for focused service hotels. This strategic relationship with two very experienced specialists would allow Hilton to rapidly roll out our first focused service hotel brand in China. This initiative is in line with our aim to be a leader in the focused service hotel sector in Asia`s key growth markets. These Hilton Garden Inn hotels will be a significant addition to our existing business in China, where we already operate five Hilton hotels, said Mr. Carter.

Adrian Kurre, senior vice president, brand management for Hilton Garden Inn, said, Throughout the past 10 years, Hilton Garden Inn has emerged as one of the fastest growing brands in North America -- establishing our hotels as the preferred hotel choice for travellers looking for high quality accommodations at an affordable price and ranking high in customer satisfaction among competitor brands in our category. We are looking forward to introducing the Hilton Garden Inn brand and offering a new lodging option to travellers throughout China.

The agreement follows RREEF`s entry to China`s real estate market last month via its investment in a mid-market, residential project in Zhuhai, southern China. Together with three local co-investors, RREEF will develop a US$225 million residential project to provide more than 2,000 affordable apartments to primarily local middle class owner-occupiers.

We believe long-term prospects for real estate market fundamentals in China are very good and are proactively pursuing investment opportunities which are supported by China`s long term economic growth prospects, rising middle class and urbanization, said RREEF`s Head of Acquisitions, East Asia, Brian Chinappi. We`re very positive on the focused service business and leisure travel sector in China, where there is limited supply of branded product and growing demand. We are pleased to be working towards a partnership with such experienced sector experts as Hilton and H&Q Asia Pacific.

Chih Wang, Managing Director of H&QAP, said, H&Q Asia Pacific has identified the growth and power of the Chinese consumer market for many years. Following the conclusion of our successful investment in Starbucks Coffee, we attempt to produce high quality accommodations to fill the void of the focused-service hotels sector in China. This alliance with Hilton and RREEF demonstrates the attractiveness of China as a major hospitality market of the future. We have full confidence in the Hilton Garden Inn brand, and we look forward to working closely with Hilton and RREEF to establish the Hilton Garden Inn as the first choice for smart travellers in China and the leader in its sector.