China's largest tourism conglomerate, Jinjiang International Holdings Co Ltd, is to franchise its budget hotel arm, Jinjiang Inns, in its bid to expand nationwide.

Jinjiang international, which was created by the June 9 merger of Shanghai Jinjiang Holdings Co Ltd and Shanghai New Asia (Group) Co Ltd, plans to increase the number of Jinjiang Inns to 80 in 2005 and to 200 by 2008. The move is part of its overall plan to be listed among the world's top-30 hoteliers within three to five years.

Currently, the company owns 23 Jinjiang Inns, including 17 in Shanghai.

"At the first stage of expansion, we will invest in building Jinjiang Inns nationwide. When the brand matures, it will attract franchisees, such as private companies, and boost the expansion speed," said Yu Minliang, chairman of Jinjiang International, yesterday.

In the past three months, the company has recruited 21 franchisees, including six in Shanghai.

Each pays the company 350,000 yuan (US$42,169) as well as 3.5 percent of its annual income.

"With annual investment return of 13 to 15 percent, the property should be attractive for investors," Yu said. "Adding asset appreciation, the annual return could be as high as 25 percent."

Jinjiang inn has proved its profitability in the past five years with an annual occupancy rate of around 96 percent. Even during the SARS outbreak, the occupancy rate stood at 50 to 60 percent.

The company is also eying cooperation with overseas hotel groups, Yu said.

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