Istithmar has revealed plans to establish a $50 million joint venture company to roll out limited service hotels in Asia.
The new company, formed in partnership with Tune Hotels.Com and City e-Solutions is expected to build some 30 Tune Hotels in Malaysia, Indonesia, Thailand, the Philippines and Singapore over the next three years.
"We have been building our hotel portfolio across many different markets and I am excited that we are able to reach into the Asian budget accommodation market with this innovative, fast growing brand," said Joe Sita, chief executive of Istithmar Hotels FZE, a division of Istithmar PJSC.
"It gives us an opportunity to invest in a segment that is poised for tremendous growth in the years ahead and touches on several key themes such as the increased demand for travel by the rising middle class in Asia and rapid growth of low cost carriers (LCCs) in the region."
Tune Hotels.Com is a no-frills limited-service concept created by the founders of Air Asia - Tony Fernandes and Kamarudin Meranun - to address the need for affordable, quality accommodation in Southeast Asia.
Rapidly growing regional economies, coupled with the exponential growth of LCCs, have generated an unprecedented volume of value-based travellers.
"The hotels sector is crying out for clean, safe branded budget accommodation in major cities," said Richard Johnson, managing director of Istithmar Real Estate, another division of Istithmar PJSC.
"The Tune Hotels.Com brand will deliver that need in destinations across Asia.
"Customers can be sure of a quality ‘sleep and shower' experience, in a clean and safe environment, and can then choose which other items they want on top. It's a really exciting model and we're looking forward to rolling it out across the region."
Istithmar Hotels has already announced one venture in the budget hotels sector this year; a deal with UK-based easyHotel to build and manage easyHotels in the Middle East.
Tune Hotels.Com claims to offer "a five-star sleeping experience at a one-star price", with rooms expected to start from as little as $3 for customers who book in advance though the website.
Rooms in Tune Hotels will include a luxury bed, en-suite bathroom, and an electronic key card entry system in a "space-efficient" room of approximately 10m2.
Each hotel has an outsourced 24-hour convenience store, a branded F&B outlet, on-site 24 hour guarded security and CCTV cameras throughout the public areas of the properties.
Tune's no-frills model means that certain items such as air conditioning, towels and bathroom amenities are available for small additional charges.
Vincent Yeo, chief executive officer of City e-Solutions, a listed subsidiary of CDL, said that the deal was important for the region and would bring a new model to the market.
The first Tune Hotel opened in Kuala Lumpur in April and has enjoyed 91% occupancy since opening.
Additional properties are set to open in Penang, Johor Bahru, Kuching and Kota Kinabalu.
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