StayNTouch will be an independent company again after U.S. president Donald Trump took the unprecedented step of issuing an executive order to block its sale to Shiji Information Technology.
The acquisition was originally announced in September 2018 for an undisclosed fee.
Trump's intervention is being made on grounds of national security, a statement from the White House says.
StayNTouch is a cloud-based suite of hotel management solutions powering 75,000 hotel rooms around the world.
It was founded in 2013 by Jos Schaap, who moved with the business to Shiji in 2018 but left in May last year to become the owner of Forward Thinking Hotels & Technology.
In February 2016, Shiji Group had been part of a $9.5 million Series A funding round for StayNTouch.
Trump says he has "credible evidence" that through the sale, Shiji "might take action that threatens to impair the national security of the United States."
The Executive Order says that Shiji has around four months (120 days) to divest all its interests in the company and "any operations developed, held, or controlled, whether directly or indirectly, by StayNTouch at the time of, or since, its acquisition."
A Shiji Information Technology official says it is "disappointed" by the Executive Order, adding: "We believe president Trump’s decision was incorrect."
An emailed statement says: "Shiji is not a threat to U.S. security in any way. The U.S. government did not adequately explain the basis of its decision to us. In fact, Shiji does not access the guest data of StayNTouch’s customers.
"We offered a range of significant proposals to mitigate any concerns the U.S. government might have, including further restricting access to guest data and appointing an independent monitor to ensure these protections. Unfortunately, those offers were rebuffed."