Tune Hotels.Com to invest RM200m this year
Posted on | March 12, 2007
By ASHWIN RAMAN
Tune Hotels.Com expects to invest in excess of RM200 million by end-2007 in purchasing and refurbishing properties in Southeast Asia as part of its bid to establish itself as the biggest no-frills hotel operator in the region.
Its chief operating officer Andy Song said the hotel operator had targeted to purchase 16 properties by year-end and had already acquired four for a total of RM50 million.
He said each purchase was estimated at an average of RM10 million while refurbishment would be another RM10 million. However, Song told The Edge FinancialDaily the bulk of the refurbishment for the 16 properties would be carried out next year as Tune Hotels.Com only intended to launch four hotels this year.
Besides its flagship hotel in Kuala Lumpur to be launched on April 9, he said the company would open a hotel each in Penang, Kota Kinabalu and Kuching by year-end.Of the four hotels that it acquired so far, he said two were in Kota Kinabalu and one each in Penang and Johor Bahru. He added that the acquisitions were funded by borrowings.
“In our roadmap for the next three years we want to have 40 hotels, and we need to keep the momentum up and find the right properties,” Song said, adding that it intended to open up to 10 properties in the Klang Valley alone. Tune Hotels Sdn Bhd, which owns Tune Hotels.Com’s assets, is 72% owned by Tune Ventures Sdn Bhd. Song said advertisements would be the main revenue generator for the hotels, and without typical hotel maintenance costs such as food and beverage outlets, swimming pools and gymnasiums, Tune Hotels.Com would see returns on its investments within three years. He said it had already secured agreements with CIMB Bank, KingKoil Corporation Sdn Bhd, Pensonic Holdings Bhd, Nippon Paint (M) Sdn Bhd and Johnson Suisse (Malaysia) Sdn Bhd to advertise on the room floors and stairways of its Kuala Lumpur hotel.
He also said Tune Hotels.Com had already identified properties in Bali, Bangkok and Siem Reap with plans to launch hotels there in 2008 as the company was looking at establishing hotels in popular AirAsia destinations. Through its cooperation with AirAsia Bhd, Song said, Tune Hotels.Com would also consider setting up hotels at AirAsia X destinations in the future such as London or China. Apart from making acquisitions, he said Tune Hotels.Com would also obtain a few properties on lease, such as the hotel it intends to launch in Kuching this year.
Song said the company was also in talks with Malaysia Airports Holdings Bhd to lease a parcel of land next to the low-cost carrier terminal to develop a 250-room hotel for transit passengers. The hotel is expected to be ready next year.
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