Inno-Tech Holdings Limited has announced that it has invested RMB10.2 million to form a new joint venture with Zhejiang Hexiang Group to develop a business in the Chinese budget hotel sector.
An initial registered capital of this new joint venture is RMB20 million consisting of RMB10.2 million from Inno-Tech Holdings and RMB9.8 million from Zhejiang Hexiang Group, which held 51% and 49% of shares of the joint venture, respectively. The new company will focus on management and operation of budget hotels in China.
According to local media, Zhejiang Hexiang Group has agreed to provide 200 properties for Inno-Tech Holdings' selection. From these Inno-Tech Holdings will choose suitable hotel related properties which can be leased to the new joint venture by June 30 2010. The Zhejiang Hexiang Group will free lease those properties to the new joint venture with an effective period of at least 15 years. Inno-Tech Holdings is to be responsible for the renovation of those properties at their own expense, with estimated cost for each room of between RMB25,000 and RMB30,000.
During the first twelve months following the signing of the agreement for the new joint venture, Inno-Tech Holdings will pay a total of less than RMB20 million on the hotel renovation.
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