Will Chinese investors continue to look for “trophy” properties and luxury brands in 2018, or can a mid-range hotel brand successfully market to Chinese investors?

Single hotel investment will be difficult under the new "guideline" unless the Chinese buyers themselves run hospitality business and it would consider as a "strategic expansion". Also, a "blind-pool" fund raising is typically difficult for Chinese investors as they would prefer to start with one actual project first to establish trust and "chemistry".

With the limited information provided and with a good prior fund performance, marketing a new fund in China, based on mid-range hotel brand would not be received negatively.

First, the Chinese governmental restrictions on foreign investment have and will continue to have a dramatic effect on the ability of Chinese investors to invest in offshore real estate related investments. Until these restrictions are reduced or rescinded, which is hard to predict from here in the US, I would think raising capital in this manner would be a challenge. As I understand it from Chinese clients, if the core business of a Chinese company includes hospitality, there will be less interference in restricting them from investing in their core business. This would mean a Chinese hotel company who is seeking to expand outside of China might be permitted to make an investment in a US hotel brand, where others, likely not. Consequently, the best approach might be to seek out these firms for investment, though I doubt a fund structure would be a suitable form for them to invest.

I suggest you consider a couple of ideas. First, some Chinese investors already have capital offshore. They are not the investors in the spotlight like HNA and Anbang, but those who are looking for reliable partners and who have operations outside China. Second, are you prepared to consider an EB-5 pool of investors? I cannot make further suggestions without additional information. Make sure your venture is structured so as to not require CIFIUS approval. I do not know the status of your relationships in China, but I would think about coming over in connection with a meeting sponsored by The China Investor. I would read the questions submitted by potential Chinese investors and structure with a view towards addressing the concerns raised by investors and answered in posted responses.

I think it would be very challenging in the current regulatory environment for Chinese investors to invest in an overseas hotel brand. The only exception would be if the mid-range hotel brand is focused on expanding in China.