Tune Hotels aims for 7,500 rooms

By BUSINESS TIMES

BUDGET hotelier Tune Hotels.com will open some 7,500 rooms with an estimated value of RM565 million over the next three years beginning 2008, says co-founder and director Dennis Melka.

This phenomenal growth is made possible given that Tune Hotels will not own and operate all the hotels, but will instead run it for others or license it to be run by others.

“We are looking at opening between 15 and 20 hotels each year from 2008 with a room inventory of between 125 rooms to 150 rooms each,” Melka told Business Times in an interview.

“On average, each room has a value of RM75,000 … so, we will open about 2,500 rooms valued at RM187.5 million per year, but we hope to do better than that (more openings),” he said.

Tune Hotels is able to achieve this growth in inventory, given that its capital outlay is minimal compared with a four- or five-star category hotel which requires larger plot size as their rooms are larger and facilities like swimming pool, a fitness centre, restaurants and meeting rooms have to be provided.

In comparison, the Tune Hotels model fits into smaller parcels of land and even irregular shaped pieces of land located at prime location. It is even willing to take over an existing office building to be remodeled into a hotel.

Tune Hotels Sdn Bhd is 72.19 per cent owned by Tune Ventures Sdn Bhd, Datuk Kalimullah Hassan and Lim Kian Onn hold 12.03 per cent each and 3.75 per cent is held by Tune Hotels Employee Holding Sdn Bhd.

The shareholders behind Tune Ventures, meanwhile, are Datuk Tony Fernandes (40 per cent), Datuk Kamarudin Meranun (30 per cent), Dennis Melka (25 per cent) and Tune Strategic Investments Ltd (5 per cent).

Its first flagship hotel, located on Jalan Tuanku Abdul Rahman in Kuala Lumpur, opened for business on April 27 2007.

Meanwhile, most hoteliers would feel that one hotel would suffice in each city. Tune Hotels begs to differ and is in negotiations with several parties for more openings in the city centre.

“We are negotiating for several buildings and parcels of land in Kuala Lumpur.

“For instance, there is still a need for an affordable place to stay in the Chinatown, Masjid India and Bukit Bintang areas,” he said.

Apart from looking at Malaysia and Jakarta and Bali in Indonesia for hotels to be built on a joint-venture basis, Tune Hotels is also in talks with at least 12 others in India, Indonesia and Thailand for a licensing agreement.

“We are not limiting our openings to destinations that budget carrier AirAsia flies to,” he said.

Still, Tune Hotels’ priority is to develop the chain in Malaysia first before expanding to Indonesia, Thailand and Singapore in a big way.

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