More than 20 hotels across five countries in the GCC states are planned by a consortium, of 12 regional investors that will finance $150 million for the launch and development of this product.

The owning company for the hotels, Ishraq, will control the rights to the three-star brand - the first international brand of its kind to enter the Arabian Gulf countries on this scale - across the GCC, with the exception of Saudi Arabia.

Dubai International Capital (DIC), the international investment arm of Dubai Holding, is Ishraq's anchor investor and the key player in the $150 million deal, which was structured, arranged and placed by Bahrain-based Addax Investment Bank.

The 20 properties will be operated on behalf of Ishraq by Hospitality Management Services Middle East (HMS), the master franchise developer and operator of Express by Holiday Inn in the Gulf states.

The first property will be built at Knowledge Village, part of the Dubai Technology and Media Free Zone (TECOM).

For DIC, the international investment arm of Dubai Holding, this is the fourth major strategic investment outside Dubai in recent months.

The company invested $1 billion in DaimlerChrysler, making it the company's third largest shareholder, followed by the $1.5 billion acquisition of The Tussauds Group in the UK - the largest operator of visitor attractions in Europe.

DIC has also launched Jordan Dubai Capital, a $280 million investment company targeting opportunities in the Jordanian economy.

Dubai International Capital CEO Sameer Al Ansari said: 'There is a huge gap in the market for branded budget hotels, which we believe are essential to maintain the target visitor figures for the next 10 years in the Gulf.

'Express by Holiday Inn is the largest budget hotel brand in the world, with proven results, and the launch in the Middle East will help fill the gap for affordable accommodation at guaranteed quality.

'This move really reflects the development of tourism in the Gulf which, to date, has concentrated on iconic world-class projects.

'We have traced the rise and profile of inbound tourists and have identified that the time is right to tap into the three-star market which is flourishing around the world.

'Further to this, this is an example of DIC widening its foreign portfolio while investing in long-term projects that will benefit both the UAE and the Gulf.'

Addax Investment Bank general manager Yousef Al Essa said: 'This is the first deal of its kind, in terms of profile, regional spread and investors, encompassing the premier institutional and high-net worth investors from each of the five countries included in the deal.

'In fact, the transaction met well with potential investors and was heavily over subscribed.

'What makes the deal stand out is that this is the first time that investors throughout the Arabian Gulf countries have come together to develop a hotel fund in the Middle East with the objective of creating a chain of hotels under the same brand name across multiple countries.

'In addition, the pace of the project is remarkable: the development of 20 hotels - from land negotiations through to completion - is across five countries simultaneously, and during a period of only five to seven years.'

According to WTO figures, the Middle East will be the fastest-growing region by 2020, with estimated growth of 7.1 per cent per annum, and 69 million tourists. 37 per cent of these tourists are tipped to be intra-regional travellers, with 32 per cent coming from Europe.

Thierry Loué, managing director of the operator HMS, said: 'Express by Holiday Inn is the world's most successful and profitable budget hotel brand with more than 1,500 hotels worldwide, and a new Express hotel opening every four days.

'The move to market will be fast with the first hotels opening in Dubai at the end of 2006 and the rest of the hotels open by 2010.

'In addition, from an operating point of view, this sector offers higher returns on investment than luxury properties, as a consequence of reduced investment and operating costs.'

To address the identified regional market need for value hotel accommodation, particularly for business travel, the development of the Express by Holiday Inn brand will see properties located within commercial centres, along major road arteries and in around business and industrial parks.

Chris Moloney, chief operating officer, InterContinental Hotels Group, Middle East and Africa, said: 'There is a need for this type of internationally branded three star hotels that provide quality service at value for money.

'We have made a commitment to the GCC market and have the ability to respond to either owner's or customer's demands. This is why we looked for partners that really understood what the brand is about.'