French hotel group Accor and China's Huazhu on Sunday signed a deal to join forces in China, the world's largest travel market, as well as in Mongolia and Taiwan.
The agreement, signed in Paris, is aimed at developing "Accor brands and to form an extensive and long-term alliance," a statement said.
The deal, which will be finalised after anti-trust review, will see Accor's budget and midscale brands such as Novotel, Mercure, Ibis and Ibis Styles, become a part of Huazhu's network.
"All hotels under these brands will continue to be managed under Accor's brand standards and... benefit from China Lodging Group's on-the-ground support," it said.
It added that Accor will continue to lead the operations of the luxury brands such as Sofitel and Pullman.
Accor will take a 10 percent stake in Huazhu, or China Lodging Group, and have a seat in the board. Huazhu has a market capitalisation of $1.44 billion (1.15 billion euros).
Huazhu meanwhile will acquire 10 percent equity in Accor's luxury brands.
"This ground-breaking collaboration will leverage the strengths of Accor's global brands with a leading player in Chinese hospitality," said Sebastien Bazin, Accor chairman and CEO.
"China is today the largest outbound tourism market in the world; in that context, creating one of the largest hotel groups in China will lead to growth globally as those travellers come to recognise Accor and Huazhu's brands and expand their travel internationally," Bazin said.
Ji Qi, Huazhu's founder, chairman and CEO said: "The combined brand portfolio provides a full coverage from economy hotels to luxury hotels, and is unrivalled in China."
It will lead to combined access to more than 2,000 hotels in China and about 5,600 hotels worldwide.
Accor is the world's sixth largest hotel group while Huazhu is ranked 13th.