Budget hotel Tune Hotels is adopting the marketing strategy of its associate company AirAsia with rates at its first London property starting at just £9 or about RM42.
Just like AirAsia, the further in advance the booking, the cheaper the room. Tune Hotels says the average room rate at its Malaysian properties tends to be between RM40 and RM50 while special promotions can see rates go as low as 9 sen.
To achieve these rates, guests are expected to pay for extras such as towels and air-conditioning. To activate air-conditioning, guests have to purchase a pre-paid card —12 hours’ worth of air-conditioning will cost them RM12.50. A display on the pre-paid card reader in the room informs the guest how much air-conditioning credit he has left.
The hotel also recently introduced cable television as a paid extra, starting with its Danga Bay hotel in Johor which had its soft launch today.
Tune Hotels CEO Mark Lankester said energy bills make up 40 per cent of a hotel’s operating costs and letting guests choose whether or not they want air-conditioning not only cuts room rates but helps the environment as a lot of energy used by conventional hotels is wasted.
“Guests thank us for helping them use energy more sensibly,” said Lankester. “If used properly, 12 hours’ worth of air-conditioning can last two days. If you are out of the room, why do you need to use air-conditioning?”
Another rate-cutting feature? Advertising in the rooms which helps lower prices. Lankester said that it is a way to subsidise rooms but it is not viewed as a profit engine and it will make up at most 15 per cent of the hotel’s revenue.
“We borrow their eyeballs but give it back in terms of lower room rates,” said Lankester.
But though the hotel has eschewed the traditional star-rating system, the room viewed by The Malaysian Insider was surprisingly pleasant. Rooms were small with not much walking space but thoughtfully designed to make the most of the space. A swinging table attached to a metal pole serves as a laptop table so guests can type while sitting on the bed and watching the sleek 32-inch LCD television mounted on the wall. A custom-designed safe deposit box is tucked underneath the bedside table.
The poster advertisements in the room, one for a biscuit company and the other, an air-conditioner manufacturer, were noticeable but the non-traditional feature walls of the room made it seem less out of place. Only the large Japanese soap advertisement in the bathroom, which is located above the toilet, could be considered obtrusive. The room was also relatively cool even with just a ceiling fan.
Lankester also stressed the quality of the beds and the ceiling fans, pointing out that the mattresses sport 660 springs and the divan 440. The fans, he said, used “typhoon blades” but still minimise noise.
There is no gift shop in the hotel but a 7-Eleven convenience store, a bank ATM and food and beverage functions are outsourced to an Indonesian cafe chain.
Lankester, who is big on the environment, said the European-looking recycling bins next to the lifts are not a “gimmick” but the hotel really does aim for sustainability.
“The hot water is heated by solar power and heat recycled from air-conditioner compressors,” he said. “The initial cost to install such systems is expensive and we would not do this if it was just a gimmick.”
He said the hotels, which enjoy a 90 per cent occupancy rate, with the LCCT and Kuala Lumpur properties at virtually 100 per cent, can be a global business.
There are currently nine Tune Hotels but about 90 are planned to open by 2016 under current expansion plans. Lankester admitted that the company, which started in 2007, is slightly behind, partly due to the 2008 global financial crisis.
He added there are no plans to list the company on the capital market to raise funds but the expansion strategy is to grow globally via “smart partnerships” and debt financing.
“We need smart partners who know what we’re doing and have a flair for real estate,” he said. “We depend on partners who know the lay of the land, comprehend hospitality and know how to comply with local regulations.”
Tune Hotels has already signed four joint ventures with Indian, Thai, Singaporean and UK entities to open hotels in India, China, Bangladesh, Thailand, the Philippines, Indonesia, Australia and the UK. Apart from that, he is also in discussions with partners to open hotels in Austria, Turkey and the so-called BRIC group of countries comprising the emerging market giants of Brazil and Russia in addition to its existing plans for India and China.
Tune Hotel’s UK partner, Queensway Group Ltd, is investing some RM800 million to build 15 hotels in the UK. The 218-room Danga Bay hotel cost about RM35 million. Last week, it signed a RM100 million 50-50 joint venture with Plato Limited, which is listed on the Singapore stock exchange, to open 10 hotels in Southeast Asia, Australia and the UK.
Lankester said that while the company does not need to list to raise funds at the moment, it eventually will.
The next hotel it will open is the one in Kota Damansara, a suburb of Kuala Lumpur, on June 1. Lankester said he sees a growing market for such suburban hotels and it will cater for those visiting the 500,000-odd residents living in the vicinity of Kota Damansara.
“Visitors used to stay with families but times have changed,” he said. “You don’t want five people coming for a week or two as it disrupts the lifestyle. You can say: ‘I’ll put you in a hotel and come pick you up for breakfast’.”
So, plan your holidays and enjoy London for a song..........
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