Malaysia: Hoteliers unfazed by entry of Tune Hotels

Malaysia: Hoteliers unfazed by entry of Tune Hotels
Aug 30, 06 1:57 am

As Tune Hotels.Com, a new budget hotel chain backed by high-profile investors, prepares to make its entry, other players are unruffled.

They say the market is big enough for everyone. In fact, demand is so strong that existing players don't have enough rooms to offer.

This appears to be the reason why Datuk Tony Fernandes, founder of budget carrier AirAsia Bhd and a group of businessmen are investing in budget hotels.

They plan to have a chain of between 60 and 70 budget hotels, starting first in Malaysia before expanding across the region later.

"Generally there will be no threat ... the pie is big enough for all," the secretary-general of Malaysia Budget Hotel Association (MBHA) P. K. Leong told Business Times in a telephone interview.

According to Leong, AirAsia's presence itself has created a bigger market for its member hotels which stand at 1,000 with some 40,000 rooms nationwide.
With the airline expecting passenger numbers to rise to 15 million in the year ending June 30 2007 from some nine million passengers in the fiscal year ended June 30, Leong feels that there is need for more rooms in this category.

MBHA members' average room rate ranges between RM50 and RM130.
Tune Hotels, however, is copying AirAsia's model, offering cut-price rooms, starting from as low as RM9.99 per night. It has started to advertise on the web for its first upcoming hotel, stating that "The earlier you book, the cheaper it gets!"

The first flagship, Tune Hotels.Com, located at the intersection of Jalan Tuanku Abdul Rahman and Jalan Sultan Ismail in Kuala Lumpur, is scheduled to open by the end of the year.
The Grand Centrepoint Hotel was bought by Tune Hotels Sdn Bhd for RM12.5 million and will be renovated and refurbished to be transformed into 180-room hotel from the current 100-room.

Tune Hotels is expected to either purchase or lease existing hotels and remodel them, or build new ones, as part of its plans to eventually have hotels in all AirAsia destinations.

Source : Ehotelier
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