Tune Hotels has responded to claims that its pricing strategy for its two Bali properties is threatening the viability of local, Balinese-owned “Melati “ class hotels.
Quoted in Bali Post, a member of the Badung House of Representatives alleged that a Tune Hotel in Legian was "of a five star standard" but offering prices as low as Rp. 230,000 (US$23) a night which compete with locally owned and operated "Melati class" hotels.
Said Puspa Negara, “That is what you call unhealthy competition. Whatever the reason for this, even in the name of promotion, this is unacceptable. Five star hotels should not sell below a minimum promotional price of Rp. 500,000 to Rp. 600,000."
Balinese tourism leaders are concerned that the low price approach of Tune Hotels will destroy Melati hotels owned by local businesspeople and could destroy the normal market mechanism.
Tune Hotels CEO Mark Lankester siad in a statement, “Tune Hotels.com is a limited service product. What this means is that we eschew the traditional amenities that our guests have told us are not important to them and pass on the cost savings directly to our guests.
“Our overall pricing policy is driven very much by our business model. Our model is that bookings are driven through our website at www.tunehotels.com and our booking engine deploys a proprietary demand based pricing model.
“What this means is that consumers, similar to the low cost carriers, who plan in advance can obtain very attractive room rates for stay dates booked significantly in advance.
“Bookings made at a late stage, i.e. for only a week in advance or if a walk-in, attract a higher price, depending on the demand for room bookings on that specific date and generated by the software within our bookings engine.
“For our Bali hotels a single room rate starts at Rupiah 68,000 per night, not including charges and taxes, again provided you book significantly in advance and the other end of the spectrum on late bookings or walk-in bookings, we would naturally be comparable with other 3-star hotels.
“Our mantra is that we do provide a “5-Star Sleeping Experience for a 1 Star Price”, meaning that for attractive room rates for advance bookings, we offer a great night’s sleep with great beds. We are not a 5-star hotel with the amenities and services of a 5-star hotel.
Lankester said he hoped his statement would "put the matter to rest".