China's first homegrown budget hotel brand, Jinjiang Inn, is furthering its global push.
On Thursday, it announced a partnership with Indonesia's PT Marindo Investama to open at least 30 Jinjiang Inns in that country.
In a statement to the Shanghai Stock Exchange, Shanghai Jinjiang International Hotels Development Co Ltd, which operates more than 700 Jinjiang Inns nationwide, said it has authorized PT Marindo, a local hotel operator, to run the Jinjiang Inn brand in Indonesia.
The contract is for 15 years, and the two companies have the option to either end it earlier or extend it by another 10 years, depending on how the cooperation fares.
PT Marindo Investama, which is a major investor of PT Maspion, a major Indonesian corporation founded by ethnic Chinese, is required to open at least 100 hotels. Among them, at least five hotels, with a mini mum of 500 rooms, must be opened in the first three years. Ten hotels should open in the first five years and 30 within the first 15 years.
PT Marindo Investama will pay Shanghai Jinjiang a commission for using the Jinjiang Inn brand in Indonesia.
"The deal helps promote brand awareness of Jinjiang Inns overseas and also can better serve Chinese tourists abroad," Shanghai Jinjiang's statement said.
Chinese tourists are flooding destinations worldwide, as their pockets grow deeper along with China's economic rise.
In 2012, the number of cross-border tours taken by Chinese travelers grew by 18.41 percent to 83 million on the back of a decade of double-digit growth, according to an annual report put out last year by the China Tourism Academy.
A quarter of the tourists spent more than 10,000 yuan ($1,652) on their trips, and another 30 percent spent 5,001 to 10,000 yuan.
The report for 2013 is still in the making, but analysts are predicting similar growth.
Jinjiang's international expansion follows one that took place last March, when it unveiled a midrange hotel chain called "Campanile & JinJiang" with France's Louvre Hotels Group SAS in Paris.
Under that partnership, both Jinjiang and Louvre will choose 15 hotels in the most-visited cities on either side to become co-branded properties. In France, the 15 will be in cities that include Paris, Bordeaux, Lyon, Marseille and Nice.
"Competition is fierce among budget hotel chains in China, so going abroad will help Jinjiang Inns find a new engine of growth," Liang Li, a catering industry analyst with Northeast Securities Co Ltd, wrote in a report on Thursday.
Liang rates a "buy" for shares of Shanghai Jinjiang, predicting earnings per share of 0.62, 0.74 and 0.95 yuan from 2013 to 2015.
In September, Dalian Wanda Group Corp Ltd announced a plan to open eight to 10 five-star hotels overseas. The announcement was made after Wanda invested 700 million pounds ($1.14 billion) in a five-star hotel in London.
