Tune Hotels IPO

Check out the website of Tune Hotels at www.tunehotels.com. I like the simplicity of the website. The thrill of choosing your own 'add on-s' is evident when you try to book for a room & given a selection of the 'enhancements' such as: air conditioning, towel rental (?!), entertainment package (no, not that kind of entertainment! They refer to 32-inch LCD TV with 11 channels), wireless internet access, hair dryer, breakfast set, hotel insurance, coaches to Resort World Sentosa/Marina Bay Sands.

(KUALA LUMPUR) Tune Hotels Regional Services Sdn, the budget hotel chain owned by Tony Fernandes, head of South-east Asia's biggest low-cost carrier, may go public in early 2013 to expand its hospitality network, its chief executive officer said.

Tune Hotels, a unit of investment company Tune Group led by Mr Fernandes, aims to have as many as 60 hotels across 10 countries including the UK and India by the end of 2012, said Mark Lankester, CEO of the hospitality group. The goal is to operate 100 by 2014, he said in an interview in Petaling Jaya, outside Kuala Lumpur.

'We need to raise more capital to invest and continue the brand-growing,' Mr Lankester said in an interview on Tuesday. 'For us to continue growing, the cheapest capital is always going to be public capital. Securing public capital through an IPO (initial public offering) makes a lot of sense.'

Mr Fernandes, 46, is aiming to repeat his success with AirAsia Bhd, which was listed in 2004 and overtook national carrier Malaysian Airline System Bhd (MAS) last year to become the country's biggest airline by market value. AirAsia's shares have doubled in the past year, while MAS has fallen 18 per cent.

AirAsia has said that it intends to spin off and list its Thai and Indonesian units this year, while its long-haul associate AirAsia X Sdn may sell shares in Europe and Asia in 2012.

Tune Group, which Mr Fernandes co-founded with AirAsia's deputy CEO Kamarudin Meranun, invested in businesses ranging from hotels, prepaid mobile phone services to online financial products.

Petaling Jaya-based Tune Hotels, which is profitable, has been reinvesting its income to grow the business, Mr Lankester said, without disclosing its earnings. The company is preparing itself for an IPO and has yet to decide which stock exchange it would be listed on.

Tune Hotels adopts a so-called 'demand-driven' pricing model similar to AirAsia's, which encourages guests to book ahead in order to secure cheaper room rates.

While international hotel operators including France's Accor SA have set up economy brands such as Ibis and All Seasons targeting the budget-conscious travellers, they do not compete directly in the bargain-bucket segment targeted by Tune Hotels, said Malaysian Association of Hotels vice-president Ivo Nekvapil.

'It's absolutely a good idea because they are basically a one-star hotel concept,' Mr Nekvapil said in a phone interview yesterday. 'There's not much competition in that space.'

Tune Hotels has expanded to 12 properties in Malaysia, Indonesia and the UK since the opening of its first hotel in downtown Kuala Lumpur four years ago. Development deals are signed to add another 90 assets in South-east Asia, Australia, London and India, Mr Lankester said.

While the company owns most of the hotels currently under operation, it has accelerated the expansion through partnerships and franchise arrangements, he said. Tune Hotels teamed up with UK-based investment company Queensway Group Ltd last year to develop and run 15 properties in the Greater London area by 2017, and it is working with Apodis Hospitality Group to invest in 20 Indian hotels, he said.

Mr Fernandes entered the airline business by mortgaging his home and digging into savings to buy then AirAsia for RM1 in 2001, assuming its debts and two ageing Boeing Co planes. He now has a net worth of US$470 million, according to Forbes magazine, and is also principal of the Lotus F1 Racing team.

From Business Times, "Tune Hotels may IPO in early 2013".


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