More Tune hotels in the offing?

By THE EDGE

Some 30 Tune Hotels could be opening their doors across Southeast Asia come 2008. It is believed that the expansion will be funded by real estate funds based in Singapore and the Gulf region that are confident about the budget hotel concept.

“These funds are really keen on Tune Hotels’ ‘no frills’ model, so they are ready to park their money in it,” a source tells City & Country.

When contacted, Tune Hotels Sdn Bhd’s director Dennis Melka merely says: “These funds are aware that the limited services domain is doing very well, as experienced by similar chain hotel offerings in the US and Europe. On the other hand, 3 to 5-star hotels offer a rate which includes all the services and facilities that come with the hotel, immaterial of whether or not you use them. Here, what we are offering is sound sleep, a good shower and extras — if you want them — such as air-conditioning for a fee. And we are constantly evolving to see how we can make it better.

“Over the next few months, we are looking into putting 19-inch LCD screens into all the rooms here and you pay only it if you want to use it. We are able to do this because we have broken the cost down into layers.”

Room reservations for Tune Hotels.Com is done mainly online, where guests can make bookings six months in advance and get to enjoy cheaper rates — as low as RM9 — the earlier they book.
The flagship 175-room Tune Hotels.Com opened its doors on April 27 and experienced full occupancy on the first day of operations.

Melka says the first Tune Hotel outside Malaysia could either be in Bali or Jakarta. Destinations on the cards include Kota Kinabalu (168 rooms) and Kuching later this year, followed by Tune properties in Penang (1Q2008), Danga Bay, Johor (1H2008), KLIA (a greenfield project) and another beachfront hotel in Kota Kinabalu. Eventually, Langkawi and Bangkok will also feature Tune Hotels.

The Kuching Tune Hotels.Com is based on a licensee agreement, says Melka. “This is one of the models we are looking at, going forward; it is similar to, say, the Ritz Carlton, where YTL does not own the brand name but operates the hotel. The benefit of this for an investor is that he does not need to start from scratch, such as looking into the design or know-how. We will provide everything, from training to marketing. Reservations will be done through our main Tune Hotels’ online booking system. In other words, they do not have to reinvent the wheel,” he offers.

On the cost of putting up these hotels, Melka says it depends on the location, but on average, they are looking to spend between RM11 million and RM12 million for a 175-room hotel, including the land cost.

“Depending on the site, the number of rooms for each of our hotels could be between 100 and 300. The one we are planning for Penang is a 340-room hotel. Meanwhile, we are looking to expand our first flagship hotel by another 150 to 170 rooms — we have purchased the adjoining site, which is about 12,000 sq ft, for this purpose,” he says.

The opening of the extension is scheduled for the end of next year, but this will be subject to how the first phase does in terms of occupancy, Melka adds. The company bought Grand Centrepoint, which has been refurbished to feature the operational Tune Hotel, for RM12.5 million.
On the possible rates in Bali or Jakarta, Melka says they have yet to analyse the market, but adds that it could be about US$21 (about RM72) per room in Bali. “That’s only half of the US$45 that people have to pay in Bali for a decent quality hotel room,” he says.

Tune Hotels’ flagship, at the intersection of Jalan Tunku Abdul Raham and Jalan Sultan Ismail, was initially expected to receive its first guests on April 7 but it opened its doors only on April 27.

When asked why, Melka’s simple answer is: “To open a hotel in six months is still a record time.”

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