Tune hits back in row over Bali hotel pricing

DENPASAR – Tune Hotels has responded to claims that its pricing strategy for its two Bali properties is threatening the viability of local, Balinese-owned “Melati “ class hotels.

Quoted in Bali Post, a member of the Badung House of Representatives alleged that a Tune Hotel in Legian was "of a five star standard" but offering prices as low as Rp. 230,000 (US$23) a night which compete with locally owned and operated "Melati class" hotels.

Said Puspa Negara, “That is what you call unhealthy competition. Whatever the reason for this, even in the name of promotion, this is unacceptable. Five star hotels should not sell below a minimum promotional price of Rp. 500,000 to Rp. 600,000."

Balinese tourism leaders are concerned that the low price approach of Tune Hotels will destroy Melati hotels owned by local businesspeople and could destroy the normal market mechanism.

Tune Hotels CEO Mark Lankester said in a statement, “Tune Hotels.com is a limited service product. What this means is that we eschew the traditional amenities that our guests have told us are not important to them and pass on the cost savings directly to our guests.

“Our overall pricing policy is driven very much by our business model. Our model is that bookings are driven through our website at www.tunehotels.com and our booking engine deploys a proprietary demand based pricing model.

“What this means is that consumers, similar to the low cost carriers, who plan in advance can obtain very attractive room rates for stay dates booked significantly in advance.

“Bookings made at a late stage, i.e. for only a week in advance or if a walk-in, attract a higher price, depending on the demand for room bookings on that specific date and generated by the software within our bookings engine.

“For our Bali hotels a single room rate starts at Rupiah 68,000 per night, not including charges and taxes, again provided you book significantly in advance and the other end of the spectrum on late bookings or walk-in bookings, we would naturally be comparable with other 3-star hotels.

“Our mantra is that we do provide a “5-Star Sleeping Experience for a 1 Star Price”, meaning that for attractive room rates for advance bookings, we offer a great night’s sleep with great beds. We are not a 5-star hotel with the amenities and services of a 5-star hotel.

“The macro economic reality is that the world’s low cost carriers are driving the growth of passenger numbers and tourists overall.

“Some of these passengers will opt to stay at limited service hotels and book considerably in advance, like Tune Hotels.com, but some clearly will opt to stay at higher end hotels and resorts and locally flavoured Melati-styled accommodation.

“We have seen that the growth in total passenger numbers and in addition, our own aggressive marketing and advertising strategies, tends to benefit the entire tourism ecosystem.

“First of all, oftentimes we are full on 100% occupancy and other hotels, inns and resorts are automatically beneficiaries from our aggressive marketing.

“Secondly, the guests at any of the Tune Hotels.com network end up actually spending more time and money in the local economy as they have saved on “in-hotel” costs, specifically room rates. The multiplier effect within the local economy can be quite significant.

Travellers and tourists are considerably smarter today and know what they want and are in a position to make informed decisions.

“A Tune Hotel will not fit the needs and expectations of all. Each class of hotel in, for example Bali, has its specific lure and attractions. What we do offer is additional choice in the hospitality spectrum and that choice comes with a limited amount of services.”

Lankester said he hoped his statement would "put the matter to rest".