Tune Hotels set to fly

KUALA LUMPUR – Tune Hotels.Com, touted as ASEAN’s first “no frills” hotel chain, has set its eyes on the world, having just opened its first and flagship hotel in Kuala Lumpur.

Speaking to reporters after announcing plans for its first hotel in Kota Kinabalu, Sabah, Tune Hotels.Com co-founder and director Dennis Melka revealed the group would open about 7,500 rooms with an estimated value of RM565 million (US$166.22 million) over three years, beginning 2008.

The game plan is to develop hotels in all the major cities in Malaysia before tackling international destinations. It has identified Jakarta and Bali in Indonesia for joint-venture hotels, and is in talks with various parties in India, Thailand and Indonesia for licensing agreement.

It plans to go beyond destinations that low-cost carrier AirAsia flies to. (Tune Hotels is linked to AirAsia as the latter’s chief executive Dato’ Tony Fernandes is also one of Tune Hotels’ co-founders.)

To date Tune Hotels.Com’s hotel portfolio includes a 340-room hotel at Burmah Road in Georgetown, Penang, scheduled to open in March 2008; a 250-room hotel in Johor’s Danga Bay in the new Iskandar Development Region (scheduled for early 2008); a 168-room hotel in 1 Borneo Lifestyle Hypermall, Kota Kinabalu, Sabah (scheduled for January 2008); and a 150-room hotel in Kuching, Sarawak (scheduled for late December 2007/January 2008).

The company is also in talks with Malaysia Airports Holdings Bhd to lease a parcel of land next to the Low-Cost Carrier Terminal in Sepang to develop a 250-room hotel for transit passengers (scheduled for 2008).
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Although the game plan may sound a trifle ambitious to some parties Melka deems it mission possible as Tune Hotels.Com will not own and operate all the hotels, but will instead manage them for other owners or franchise the brand to other hotel operators.

Melka said the group is in talks with local and overseas institutional property funds to raise RM250 million for developing the hotels in both Malaysian and international destinations.

Currently, Tune Hotels has RM18 million in shareholders’ funds.

On the KL flagship hotel in Kuala Lumpur, which is now operating at about half its total room inventory of 173, the hotel is enjoying 100 per cent occupancy.

Average room rate is RM40. On full opening it may up the ARR to RM55 with average room occupancy at 75 percent.

Melka said the hotel is already profitable. “Our operating cost is lean and our net cash is positive.”

Tune Hotels.Com has promised travellers something that has not been delivered before, which is “a five-star sleeping experience at a one star price”.

The hotels offer rooms at rates from RM9.90 per night, a price yet unseen in budget hotels in the region, if bookings are made in advance and at non-peak times. The average room rate will, however, be about RM59.90.

Guests enjoy rooms that are equipped with a “five-star” mattress, a “power shower”, air-conditioning, clean sheets, a high-quality duvet and thick, high-grade towels. There will also be electronic-based key card system and closed circuit television surveillance in the hallways to ensure safety.

The hotels will not have a swimming pool, minibar, desk, sofa, television or wardrobe, or a kitchen. But all will have a café selling snacks and drinks and other basic necessities.

Tune Hotels.Com has also launched its own online booking site at: www.tunehotels.com

AirAsia’s Fernandes said, “Much like no-frills air travel has revolutionised Asia’s skies, Tune Hotels.Com is poised to radically change the economy and limited service hotel industry in Asia.”

Note: Tune Hotels Sdn Bhd is 72.19 per cent owned by Tune Ventures Sdn Bhd.The shareholders behind Tune Ventures are Dato’ Tony Fernandes (40 per cent), Datuk Kamarudin Meranun (30 per cent), Dennis Melka (25 per cent) and Tune Strategic Investments Ltd (five per cent).

– By Corinne Wan