Budget airline boss opens door for Asian no-frills hotels

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SINGAPORE, July 8 (AFP): Having conquered Southeast Asian skies with his pioneering budget airline, Malaysian entrepreneur Tony Fernandes hopes to repeat the success of his business model with a down-to-earth chain of no-frills hotels.
Despite a chorus of skeptics, Fernandes almost single-handedly brought low-cost flying to the region with AirAsia.
Now he believes his Tune Hotels.Com project can do the same for budget accommodation in a region where cheap has usually equated with shabby and badly managed.
Co-founded by Fernandes, Tune Hotels.Com first opened in downtown Kuala Lumpur in April and has been enjoying an occupancy rate of more than 90 per cent from day one, the company says.
Industry watchers say initial demand for the Kuala Lumpur outlet shows Southeast Asia is starved of quality in the sector.
"There are a lot of travellers who are looking for that kind of service," said Ali Mirza, executive director with market research consultancy MarketShare in Singapore.
"So there is a new need in the marketplace for budget hotels," he said, adding "chances are very high" of success.
Analysts believe demand for budget hotels will take off rapidly following the blossoming of the region's low-cost airline sector, led by AirAsia.
Fernandes launched AirAsia in December 2001 with just two aircraft. It now serves domestic and international routes throughout the region, and spawned a number of imitators.
Dennis Melka, director and co-founder of Tune Hotels.Com, said passengers flying the low-cost carriers cannot afford four- and five-star accommodation.
Nightly room rates at Tune Hotels.Com's Kuala Lumpur property start from 2.85 dollars, excluding taxes.
The hotel offers a bed and a hot shower but extras such as soap, towels and air conditioning cost more, much as snacks are served for a fee on AirAsia flights.
Along with the bare-bones service, both the airline and hotel offer an Internet-based reservation system which prices tickets or rooms cheaply if bookings are made in advance.