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Budget hotel chain programs $25M for expansion

Posted on April 01, 2012 09:14:41 PM [ BusinessWorld Online ]

A BUDGET hotel chain franchisee has programmed $25 million for its foray in the Philippines in the next two years to serve a reported gap in the market, an official said last week.

AN ARTIST’S rendering shows then Tune Hotel branch in Angeles, Pampanga. The franchisee behind the hotel chain plans to spend $25 million in the Philippines.

Thailand-based hotel builder Red Planet Hotels Ltd. will be using the funds to build nine Tune Hotels in the country.

“A large sector of the market demands this type of accommodation so we are very bullish for the Philippine market,” Mark Armsden, Red Planet Hotels’ senior vice-president for sales and marketing, told BusinessWorld in a chance interview.

Red Planet Hotels, the parent company of Red Planet Philippines Corp., is a franchisee of the Tune Hotels brand owned by Tune Group Sdn. Bhd., an affiliate of AirAsia Bhd. Ltd.

“By the time that all nine [branches] are built, we would have invested $25 million. That is a significant investment for the Philippines,” Mr. Armsden said.

Already, three Tune Hotel branches have been launched in Clark, Ermita and Cebu.

“The next one will be a 250-room in Makati City by the end of June this year,” Mr. Armsden said. “Then after that, we have another five in the pipeline for the Philippines next year.”

The company is eyeing Cagayan de Oro, Quezon City and Davao as the next location of the five branches, he said.

Mr. Armsden added that the company has so far spent $6 million for the three branches.

Tune Hotels’ business and pricing strategy is described as “demand-based” and “pay-as-you-use,” with customers paying only for necessities they choose, with prices contingent on room availability and demand.

Under the “no-frills” concept, Tune Hotel guests only pay for room rates, with the option of adding other amenities like towels and toiletries, air-conditioning, in-room Wi-Fi Internet access and satellite television service at selected hotels. -- C. H. C. Venzon

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