The first six locations are Bangkok, Pattaya, Phuket, Koh Samui, Chiang Mai and Krabi.

The companies expect the first six hotels to be built by 2008, and up to a further four to be completed by 2010. Each property will have about 200-250 rooms, said Erawan Group chief executive Kasama Punyagupta.

Accor is one of the world's leading mid-range and economy hotel operators. It already has 23 hotels in Thailand, with 13 more scheduled to open in the next two years, excluding those being built in the new Erawan alliance.

The Ibis brand, owned by Accor, is the world's most popular economy hotel brand, with more than 720 hotels around the world.

The Ibis hotel investment will from part of a broader three-year, Bt6-billion expansion programme at the Erawan Group, including two projects already announced: a five-star deluxe Six Senses resort and a four-star Courtyard by Mariott Bangkok, both due for completion next year.

The expansion plan is also likely to include one further four-star resort, which is currently under negotiation. Details should be announced soon.

"Our objective is to diversify both geographically and in terms of market segment," Kasama said. "By 2008 we aim to be a true 'proxy' of the Thai hospitality sector with a portfolio of around 12 hotels across the spectrum, from economy to five-star deluxe, in all the key travel destinations in Thailand."

To begin with, operation cash flows and efficient use of project debt will fund the company's initial investment of Bt6 million, while keeping within a medium-term debt-to-equity target ratio of 2:1, or less.

A rights and warrants issue, approved by the Erawan Group's board on Tuesday, will also support the expansion. The right issue will offer one new share for every three existing shares, at a price of Bt1 per share. It will raise Bt484 million.

For each new share, subscribers will also receive one free warrant. Two warrants will be convertible into one Erawan common share, at an exercise price of Bt2.15, in December 2007. The warrant conversion is expected to raise an additional Bt520 million in equity capital.

To support its warrants, Erawan Group reported to the Stock Exchange of Thailand yesterday that it would decrease its registered capital by eliminating registered shares that have not been subscribed, reducing the number of shares from Bt1.52 billion to Bt1.45 billion. Then, the company will increase its registered capital from Bt1.45 billion to Bt2.28 billion by issuing up to 826.89 million new ordinary shares at a par value of Bt1 each to support its warrant.

Michael Issenberg, managing director of Accor Asia-Pacific, said that most hotels under construction in Thailand would cater to the top end of the market, but very few were poised to cater to the fastest-growing segment, the economy sector. 

The announcement comes at a time when Ibis is experiencing its fastest-ever expansion in the Asia-Pacific region. The company launched Ibis in Bangkok earlier this year, the brand is expanding in South Korea and Indonesia, and in China and India there are plans for networks of more than 20 Ibis hotels in each country, Issenberg said.