Bedrest ... Tune Hotels, seen here in Kuala Lumpur, is entering the Australian market.Credit: AFP
A new player has entered Australia's budget accommodation market, reports Clive Dorman.
Australia is to finally get some real competition in budget accommodation, with Tune Hotels ready to take on the only other chain offering sub-$100 rooms in the main cities, French-owned Formule 1.
In the past decade, most of the large-scale construction of new hotel rooms has been at the luxury four- and five-star end of the market as investors chase high returns. Construction of three-star accommodation has been virtually non-existent.
The formerly independent Formule 1, now owned by French hotels giant Accor, appeared in Australia about 20 years ago but its growth here has been sluggish.
Tune Hotels - the brainchild of AirAsia founder Tony Fernandes - has adopted the airline's business model by aggressively "yield-managing" hotel room availability like airline seats, with rooms from $5 a night if they are booked far enough in advance. The hotel group tracks the airline's destination spread throughout Europe, Asia and Australia, and is now building its first Australian property near the Melbourne central business district. It is expected to open in December 2012.
Tune Hotels hopes to follow with properties in Darwin, Perth and the Gold Coast - all AirAsia destinations - as well as Sydney, which the airline hopes will be its next Australian destination. However, AirAsia's right to fly to Sydney has so far been blocked by the Malaysian government to protect the national carrier, Malaysia Airlines.
Hypothetically, if you were to hop on to our website and book a year in advance, you're going to pay almost nothing.
According to the chief executive of Tune, former music industry executive Mark Lankester, the company's experience centres on small rooms, with just enough space for high-quality beds, a "power shower", a desk and a range of chargeable extras, such as a refrigerator, a TV and Wi-Fi, available for a fee between $2-$5 each a night, depending on the location.
Lankester says Tune considers itself a "branded budget chain" between Formule 1 and Accor's other budget brand, Ibis, in price. "Technically, the real difference is that we are a dynamic pricing model," he says.
"Hypothetically, if you were to hop on to our website and book a year in advance, you're going to pay almost nothing. If you book online and way in advance, you're always going to get the best deal. We've taken AirAsia's business model and plonked it squarely into the hospitality space."
According to Lankester, the concept of budget "never means low quality" to the Tune Group.
"We provide rooms which are high quality, with high-quality materials and bits and bobs and widgets inside," he says. "While the cost [of the fitout] is not absolutely mad, it's important that we get that right.
"We end up putting a lot of technology into each of the sites.
"The rooms are fairly formulaic; we want consistency. Whether you stay with us in London or Australia, you're pretty much going to get the same thing. People like that."
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