Budget hotel group EasyHotel has signed a master franchise agreement that will see it expand across the Middle East, North Africa, India and Pakistan.

Speaking at the Arabian Hotel Investment Conference in Dubai last week, Stelios Haji-Ioannou, creator of the Easy brand, announced he had signed a deal with Dubai-based investment company, Istithmar, to open up to 38 hotels by 2011.

The hotels will be operated by Istithmar subsidiary Istithmar Hotels, which is expected to spend about $400m (£220m) building the properties.

Eight hotels will be operational by the end of next year, including properties in Dubai, Bahrain, Saudi Arabia, Oman and Morocco, and a further 18 by the end of 2008. The remaining 12 are scheduled to come online over the following three years.

The agreement will see EasyHotel extend to eight metropolitan sites in India, three hotels in Saudi Arabia, three in Pakistan and two in Lebanon. A further 20 selected sites have also been chosen in north Africa, Turkey and other parts of the Middle East.

Muneef Tarmoom, chief executive of Istithmar, said that the expansion was in response to market demand for branded budget hotels in the regions.

"Last year Dubai witnessed over five million inbound tourists," Tarmoom said. "Research by Istithmar has identified a significant gap in the market for budget hotels, with over-emphasis on the luxury end of the market."

Joe Sita, chief executive of Istithmar Hotels, said that EasyHotel would be adapted to meet the increasing demands of the region, in particular a growth of visitors in the conferences and exhibitions sector.

Stelios said guests at the region's new EasyHotels could expect "a smaller space for a smaller price".

By James Garner