Wednesday, April 20, 2011

AirAsia’s Fernandes May List Budget Hotel Chain Early 2013

Tune Hotels Regional Services Sdn., the budget hotel chain owned by Tony Fernandes, head of Southeast Asia’s biggest low-cost carrier, may go public in early 2013 to expand its hospitality network, its chief executive officer said.

Tune Hotels, a unit of investment company Tune Group led by Fernandes, aims to have as many as 60 hotels across 10 countries including the U.K. and India by the end of 2012, said Mark Lankester, CEO of the hospitality group.

The goal is to operate 100 by 2014, he said in an interview in Petaling Jaya, outside Kuala Lumpur.

“We need to raise more capital to invest and continue the brand-growing,” Lankester said in an interview yesterday. “For us to continue growing, the cheapest capital is always going to be public capital. Securing public capital through an IPO makes a lot of sense.”

Fernandes, 46, is aiming to repeat his success with AirAsia Bhd., which was listed in 2004 and overtook national carrier Malaysian Airline System Bhd. last year to become the country’s biggest airline by market value. AirAsia’s shares have doubled in the past year, while Malaysian Air has fallen 18 percent.

AirAsia has said it intends to spin off and list its Thai and Indonesian units this year, while its long-haul associate AirAsia X Sdn. may sell shares in Europe and Asia in 2012.

Tune Group, which Fernandes co-founded with AirAsia’s Deputy CEO Kamarudin Meranun, invested in businesses ranging from hotels, prepaid mobile-phone services to online financial products.

Tune Hotels adopts a so-called “demand-driven” pricing model similar to AirAsia’s, which encourages guests to book ahead in order to secure cheaper room rates. While international hotel operators including France’s Accor SA have set up economy brands such as Ibis and All Seasons targeting the budget- conscious travelers, they don’t compete directly in the bargain- bucket segment targeted by Tune Hotels, said Malaysian Association of Hotels Vice President Ivo Nekvapil.

“It’s absolutely a good idea because they are basically a one-star hotel concept,” Nekvapil, said in a phone interview today. “There’s not much competition in that space.”

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