China's largest hotel management group will kick off its nationwide expansion today by establishing its southwestern branch in Kunming City, Yunnan Province.

Jinjiang international Holdings Co Ltd will buy the Kunming Jinhua Hotel for about 64 million yuan (US$7.7 million). The hotel, which is to be renamed the Kunming Jinjiang Hotel, will be the flagship of the company's southwestern branch.

"In our future steps, we will set up six branches to cover China's vast territory," said company spokesman Tang Muliang. "We will have a five-star hotel as the flagship property of each branch."

Jinjiang international was established on June 9 after the city's government guided a merger of two state-owned hotel groups, Shanghai Jinjiang Holdings Co Ltd and Shanghai New Asia (Group). The new group hopes to be listed among the world's top 30 hoteliers within three to five years.

To realize that goal, the company plans to double the number of its hotels to 200 nationwide, at cost of about 3 billion yuan over the next three years.

"The new hotels and the existing ones will all be unified under the name of Jinjiang International to create a uniform image," Tang said.

On Tuesday, the Shanghai-listed New Asia (Group) Holdings Co Ltd was renamed Jinjiang International Hotel Development Holdings Co Ltd.

With a registered capital of 2 billion yuan and total assets worth 15 billion yuan, Jinjiang International operates in more than 14 provinces and municipalities across China.

The state-owned company operates 105 hotels around the country, including 42 in Shanghai. Local holdings include the Peace Hotel on the Bund, the Park Hotel on Nanjing Road and the Hua Ting Hotel Shanghai in Xujiahui area.

As the group manages many similar hotels in Shanghai, expansion to other cities is the best way to avoid inside competition, said Zhao Xueqing, a Haitong Securities analyst.

"The hotel market is fully open to overseas players, but most of them are focusing on the high-end market," said Zhao. "Budget hotels could be an especially suitable battlefield for domestic hotel managers."

Overseas hotel management groups such as Marriott International Inc, Shangri-La Asia Ltd and the Inter Continental Hotels Group have all announced plans to expand operations in China, mostly in the four- and five-star hotel market.

(eastday.com August 15, 2003)