21-01-2008: Tune Hotels targets 100 hotels by 2011
by Lim Shie-Lynn

KUALA LUMPUR: Tune Hotels Sdn Bhd aims to have about 100 hotels under its management, with an estimated total value of RM2 billion, under development or fully operational within the next three years.

Its chief executive officer Mark Lankester said: “We want to have at least 60 to 70 hotels open as we go along, with the remaining ones under construction.” Each hotel would cost between RM15 million and RM20 million, he said.

Tapping into the “visiting friends and relatives” segment, which is one of the fastest growing areas in the hospitality business, Lankester said Tune Hotels planned to own and develop at least 25 sites by March. Out of the 25, five are in Bali, Phuket, Jakarta and Bandung.

The hotel in Bali, which is expected to be operational in 2009, will mark Tune Hotels’ first international presence.

Its hotels are in various stages of development and are located in Labuan, Miri, Sandakan, Tawau, Kuching, Ipoh, Kuantan, Kuala Terengganu, Johor Baru, Iskandar Development Region, Langkawi and the low-cost carrier terminal in Sepang.

The budget hotelier has also earmarked another 45 properties by end-2008, which involves acquiring or leasing buildings and remodelling them, or building new ones.

“Looking at our development so far, I don’t see why we cannot have 100 hotels in three years,” Lankester told The Edge Financial Daily.

For Singapore, however, Lankester indicated a different, saying: “Land is too expensive for our business model, so we are looking at other opportunities in Singapore.

“We will have a presence there, just not on land. Perhaps on water.”

When asked if this meant the acquisition and refurbishment of a cruiser or a partnership with cruise liners, Lankester said: “I would not say this concept is too far off.”

He also said the deal would take some time to be finalised as Tune Hotels was seeking approval from the Singapore government. “As this is a non-traditional approach, it will take some time before we can get things started.”

For its expansion and acquisition roadmap, Tune Hotels is looking at a US$50 million (RM182.5 million) partnership with local players.

This would mark its third partnership. The company first announced a joint venture last August with Istithmar PSJC, the investment arm of state-owned Dubai World and Singapore tycoon Kwek Leng Beng’s Hong Leong Group, followed by a US$25 million joint-venture fund with foreign investment bank Credit Suisse.

Tune Hotels is 72% owned by Tune Ventures Sdn Bhd, 12% each by Lim Kian Onn and Datuk Kalimullah Hassan, and 3.8% by Tune Hotels Employee Holdings Sdn Bhd.

Provided by theedgedaily.com