BUSINESS
The JV will expand the no-frills model of Tune Hotels.com, which was founded by a group of investors including AirAsia chief Tony Fernandes.
SINGAPORE: Malaysia's Tune Hotels.com said on Tuesday it has set up a 50-million dollar joint venture with the Dubai government and a Singapore business tycoon to open 30 budget hotels in Southeast Asia.
The joint venture will expand the no-frills model of Tune Hotels.com, which was founded by a group of investors including AirAsia chief Tony Fernandes.
"Our value proposition is a five-star bed at one-star price," Dennis Melka, director and co-founder of Tune Hotels.com, said at a media briefing.
Tune Hotels.com will hold a 20 per cent stake in the venture while Istithmar PSJC, the investment arm of state-owned Dubai World, will take 40 per cent.
The remaining 40 per cent will be held by City e-Solutions, a hospitality business that is majority-owned by City Developments, which is part of Singapore tycoon Kwek Leng Beng's Hong Leong Group.
Under the venture, the three partners aim to open 30 hotels under the Tune Hotels.com brand in popular Southeast Asian destinations over the next 24 months.
"The hotel sector is crying out for clean, safe, branded budget accommodation in major cities," said Richard Johnson, managing director of Istithmar Real Estate.
"The Tune Hotels.com brand will deliver that need in destinations across Asia," he said.
According to Melka, the budget hotel sector in Asia has lagged the development of the no-frills airline sector in the region, with travellers unable to find low-cost accommodation when they travel.
"People flying these low-cost carriers most certainly cannot afford the four and five star products that exist out there, so we see this as a huge tidal wave coming to the region and we are just really responding to that trend on the hotel side," said Melka.
AirAsia and Tune Hotels.com share the same business model, offering a bare-bones service and an Internet-based reservations system which prices flight tickets or rooms cheaply if bookings are made in advance.
They also share similar logos -- both are done up in AirAsia's signature red and white colours and have a similar font.
The Tune Hotels.com website said room rates start from 9.99 Malaysian ringgit (2.85 dollars) a night excluding taxes.
Fernandes launched AirAsia as a pioneering regional budget carrier in December 2001 with just two aircraft. It now serves domestic and international routes throughout the region.
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