City e-Solutions Limited is co-investing $50 million with TuneHotels.Com and Istithmar PJSC to develop a portfolio of 30 no-frills limited service hotels in key business and tourism destinations in southeast Asia. Within the hotels, there is a 24-hour convenience store, free Internet room and 24-hour security. Items such as towels and bathroom amenities are available for an additional charge. Average room rates are approximately $15 but customers who book in advance online can book rates as low as $3. The company was created by Tony Fernandes and Kamarudin Meranun, the founders of Asia's low-cost carrier, Air Asia. The Tune Hotels business model utilizes efficiencies pioneered by low-cost carriers, including an Internet-based reservations system, demand-based pricing, and outsourcing of non-core functions. The first Tune Hotel opened last April in Kuala Lumpur, Malaysia and has been reporting 91 percent occupancy. More Tune Hotels are on track to open over the next few years in key Malaysian cities such as Penang, Johor Bahru, Kuching and Kota Kinabalu. Tune Hospitality Investments plans to open an additional 30 properties over the next three years in Malaysia, Indonesia, Thailand, the Philippines and Singapore. Each hotel will have between 150 and 300 rooms. At date, Tune Hotels is of limited interest to travel agents, since there is no travel agent program yet in place paying agent commission. Visit [www.tunehotels.com].
