Thailand’s first Tune Hotel will open in Pattaya

BANGKOK, 10 August 2010 – Tune Hotels.com will open its first hotel in Thailand’s Pattaya resort by February 2012, offering rates as low as US$3 a night for a bare-bone, no-frills room.

Two hotels under the same brand will follow in Bangkok and another in Hat Yai, South Thailand, probably by 2013.

All the hotels, with the exception of the Hat Yai property, will be built from scratch, according to a source close to the developer, Red Planet Hotels Company Limited, a subsidiary Evolution Capital PLC, listed on the Thai stock exchange. In Hat Yai, the company will restore an existing building.

Red Planet executives opted to build from scratch after it became apparent that modifying existing hotel buildings to fit the budget concept was too costly.

Sources close to the company confirmed the Pattaya property will have between 120 to 150 rooms with 450 sq metre of space on the ground floor for a convenience store and shops. Rooms will be 13.2 sq metres in space, slightly more than the developer had estimated when it signed the franchise deal with Tune Hotel.com in late 2009. Tune Hotels stipulates a room size of around 12 sq metres. The  hotel site is located on Pattaya Sai 2 Road.

The Thailand properties will offer bare-bone accommodation for a lead-in price of US$3 a night, but guests will need to pay a surcharge to have a TV, refrigerator, telephone and other facilities usually included in a hotel rate.

However, the real saving is on the back-of-the house operations that are based on out-sourcing all services to eliminate housekeeping, guest service, laundry, food and beverage and engineering departments. A Tune hotel comes with just four full-time staff per property – two working the day shift and the other two on night duty.

Red Planet’s parent company, Evolution Capital PLC, signed a franchise agreement with Air Asia’s Tune Hotels covering Thailand, Bangladesh, Philippines, Indonesia and China in December last year. It estimated at the time that it would set up 44 budget hotels across Asia and invest US$200 million in the project.

However, progress has been slow and plans to open the first hotel in Phuket failed to materialise.

Evolution Capital acquired control of Red Planet Hotels, 21 June this year, to develop the Tune Hotels portfolio. A real estate investment advisory and management firm, Evolution is headed by managing director and president, Simon Gerovich, who claimed the Tune Hotels project would gain a return on investment within three to five years.

In his initial press statement, last December, he claimed 24 hotels would be developed in 2010 and be fully operational by 2012, another 20 would open by 2013.

Out of the 44 hotels, half were scheduled for Thailand, with Bangkok and Phuket identified as key locations. China, Bangladesh, the Philippines and Indonesia were to have five and six hotels each.

Tune Hotels.com currently has nine hotels in Malaysia and Indonesia. It plans to have about 100 hotels in key cities across Asia by 2015.

The group signed a similar deal with Apodis Hospitality to develop 20 hotels in India. It plans to have 70 hotels there eventually.

And earlier this week leading UK newspapers reported Tune Hotels would open its first property, 30 August, in London’s on Westminster Bridge Road, Waterloo. Another 15 hotels could eventually open across Greater London.

The UK launch will get underway with ‘TuneDays’, when the already cheap accommodation will be cut to just one penny a night when booked online.

Tune is the private investment group of Mr Fernandes, founder of the low-cost airline AirAsia and team principal of the Lotus F1 motor racing team.