Shanghai Jinjiang International Hotels (Group) is eyeing an aggressive expansion as the mainland hotel operator taps rising demand for lodging arising from the mainland's growing economy and booming tourism industry. The company, which owns the Peace Hotel in Shanghai, aims to almost double its portfolio to 730 hotels by 2010, according to Yang Weimin, its managing director and chief executive. At the end of last year, the firm had 100 star-rated hotels and 280 Jinjiang Inn budget hotels in operation or being developed. It aims to increase the star-rated hotels to 130 and inns to 600 by 2010. 'We aim to add 2,000 extra rooms in star-rated hotels and open 70 to 80 Jinjiang Inns every year,' Mr Yang said. Its 50 per cent-owned Wuhan Jinjiang International Hotel, which had its grand opening on Friday, is the latest to join its star-rated hotel portfolio. Mr Yang believes the rapid expansion of budget hotels, which will be achieved mainly through franchising, will help lift the sector's contribution from 14 per cent of the group's total revenue in 2006 to 30 per cent in 2010. Franchised inns will account for 70 per cent of its inns portfolio by 2010, up from the current 60 per cent. For the self-owned and operated inns, Mr Yang expects the company to invest an average of 50 million yuan (HK$55.5 million) each. Even though competition is increasing with more new players in the market, such as Home Inn, Motel 168, 7 Days Inn and Super 8, Mr Yang is upbeat about the development of budget hotels because of strong demand. 'With an average occupancy rate at 84 per cent - those in prime locations even at 100 per cent - I believe there is room for charging higher rates, which now stand at merely 200 yuan per night on average,' he said. The gross margin for its budget hotel business is between 45 per cent and 60 per cent and for its star-rated hotels, 40 per cent to 45 per cent. 'We are also seeking opportunities to establish another brand for budget hotels charging even lower at 100 yuan a night,' Mr Yang said. The group is eyeing opportunities in other sectors. There are about 14,000 star-rated hotels on the mainland, of which three-star hotels account for more than 40 per cent. At the same time, renovation and upgrade projects will continue among the company's hotels. The company's Peace Hotel was closed for renovation in April last year. Mr Yang expects room rates to at least triple to US$300 per night by completion next year.