Clarence Tan (centre left), IHG's managing director for Southeast Asia and Korea, clinches the deal with Ratanakorn Asset managing director Jugkarut Ruangratanakorn.

Local developer Ratanakorn Asset is seeking to double its assets under management to 50 billion baht by joining with InterContinental Hotels Group (IHG) to launch eight new properties in Thailand under the Holiday Inn, Holiday Inn Express and Staybridge Suites brands.

The 20-billion-baht investment, which will add 2,000 rooms to IHG's Thailand portfolio, represents close to 100% of Ratanakorn's 30-billion-baht current portfolio.

But this figure underestimates the magnitude of the investment because Ratanakorn already owns the land on which the hotels will be built, said Clarence Tan, IHG's managing director for Southeast Asia and Korea.

Seven of the properties will be built from scratch, while the last one will be a rebranding of one of Ratanakorn's current hotels. Ratanakorn expects to double its annual revenue after the last property starts operations 10 years from now.

Mr Tan said the eight projects are the first step in IHG's multi-phase investment plan with Ratanakorn, but he declined to disclose further details on the timeline or value of the future deals.

"We are waiting to see the performance of these first properties before heading to the next investment stages," said Jugkarut Ruangratanakorn, managing director of Ratanakorn Asset.

Thailand is already IHG's biggest market in Southeast Asia. The company owns 24 hotels in Thailand, a cumulative 6,800 rooms, and has 14 hotels in different stages on construction.

If everything goes to plan, the company will manage 12,000 rooms in Thailand within the next five years, including those of Ratanakorn's investment, Mr Tan said.

All of the funding will be supplied by Ratanakorn, Mr Jugkarut said, with a little more than half of the investment coming from cash on hand and the rest from bank loans.

IHG will operate the properties under a standard hotel management scheme, Mr Tan said, but it will not provide any funding for the expansion.

"We don't have skin in the game," he said, "but we can contribute with our knowledge and experience. The strength of our brand is not something money can buy."

The hotels will be mainly in cities in the eastern and southern parts of Thailand, including Koh Larn (opening this year), Jomtien, North Pattaya, Rayong, Pakarang Beach in Khao Lak, Kata Beach in Phuket and Chaweng in Koh Samui.

IHG is emphasising Thailand's eastern end in the hopes that U-tapao's expansion and the Eastern Economic Corridor will provide a boost to tourism and business travel in the area, Mr Tan said.

Ratanakorn Asset holds contracts with other international hotel brands, including Ascott, and owns its own hotel brand. Mr Tan denied that there were any competitive concerns on IHG's side, saying developers often work with several hotel brands at the same time.

International brands like IHG used to concentrate on the high-end segment of the market only, Mr Jugkarut said, but Thailand's tourism boom is enticing them to enter the middle and lower segments too.

For a Thai brand, he said, it becomes more difficult to find a niche where corporations are not rapidly increasing their market share.

"This trend is like water, it can make you float or drown you to death," Mr Jugkarut said. "I choose to be on the ship."

Mr Tan said IHG will introduce one of its two recently launched boutique and low-cost hotel brands in Thailand, but he gave no specific timeline.

Kimpton, acquired by IHG in 2014, seeks to acquire unique local hotels and market them under its original name, in the style of Marriot's Moxy or Dusit Thani's Asai.

Avid hotels, due to open its first location worldwide in the third quarter of this year, is a low-cost motel-like brand that will compete with Hilton's Tru.

These new streamlined models usually provide higher margins (in the 45-55% range) than full-services hotels, and constitute the fastest-growing segment of most large hospitality firms.

"We have already received a number of requests for our Kimpton brand," said Mr Tan.

"As a local company," Mr Jugkarut said, "we decided to join hands with international companies like IHG, instead of competing head on with them in the market."

He said Ratanakorn focuses on construction and real estate, preferring to leave hotel management to a specialist.

Ratanakorn manages its own hotels, he said, but the firm would find it hard to secure manpower for expansion without partnering with IHG.