Impression of the under-construction Tune hotel in Legian, about 10 minutes’ walk from Legian Beach.
Artist’s impression of the new Tune hotel in Kuta, near to the Hard Rock Hotel. Air-conditioning will be a “chargeable add-on.” Room rates for existing Tune hotels can be had for around US$17 (they are advertised for as low as $5), but service charges and tax nearly double that figure.
Tune Hotels.com say people staying at their two forthcoming Bali properties, in Kuta and Legian and due to open in November this year, will pump more cash into businesses outside than the hotels themselves, due to their low-cost business structure that’s borrowed from the region’s expansive budget airline AirAsia, which is part of the group.
It’s also a model for these economically challenging times and is environmentally focused through conservation of power and materials, it says.
Tune’s Michelle-Ann Iking, head of sales, marketing and corporate communications, shared the hotel’s vision with The Bali Times
Tune Hotels.com is the brainchild of AirAsia founder Tony Fernandes, and therefore what kind of day-to-day input does he have in running the hotel company?
Tune Hotels.com, helmed by CEO Mark Lankester, is run under an entirely separate management team from that of AirAsia. Tony Fernandes is not involved in Tune Hotels.com’s day-to-day operations, although together with other members of the Board of Directors, he has a say in the company’s strategic direction.
Why did Tune decide to invest in Bali, and why two hotels, especially so close to each other, in Legian and Kuta?
Bali is a vibrant destination that continues to be relevant for global holidaymakers. Several of the top seven countries contributing to Bali’s foreign visitors are served by AirAsia and AirAsia-X (Australia, China, Malaysia, UK) and it makes sense to provide a compatible hospitality option to those already familiar with the low-cost carrier model.
Bali is a destination that our current guests have voted in favour of having a Tune Hotels.com presence and we listen to our guests very carefully. Kuta and Legian provide exactly the variety of tourism attractions that would prompt visitors to spend more time outside their hotel rooms than inside them. Thus we believe our limited-service offering of low-cost, high-quality basics of great beds and private showers would be a welcome option for those looking for a “5-star sleeping experience at a 1-star price.”
Although located in close proximity, we believe Kuta and Legian provide different experiences to travellers and guests alike. Both areas need centrally located, great-value rooms and so our 139-room Kuta hotel and 170-room Legian hotel are being built with variety of visitors in mind.
What’s the value of the investment?
Approximately US$6-8 million per hotel.
What’s Tune’s current assessment of tourism in Bali?
Bali’s appeal as a holiday destination is well-established – its natural attractions, the great variety of things to see and do, its year-round pleasant climate all contribute to an ever-growing influx of visitors. In addition to a continuing popularity with traditional origin markets like Australia, there is increased demand for Bali from countries like India, China and Russia, and a corresponding increase in frequency of flights to Bali that bode well for us.
AirAsia alone currently flies to Bali from Perth, Singapore, Kuala Lumpur, Bangkok and Jakarta and has plans to increase frequencies of flights as loads from markets they’ve only recently entered, i.e. Singapore, keep growing.
An investment in developing hotels is never one to be made with a short-term view and whilst the world may be in somewhat troubled times, we have a great deal of faith in the people of Bali and are in it for the long term.
In what areas of Bali’s tourism do you see potential for growth – either for your company or the sector as a whole?
It’s not so much looking at growth opportunities as more of the simple fact that we greatly appreciate what Bali has accomplished over the years as a global destination; and furthermore, what it will be doing to protect its position as a top leisure destination. We were delighted that we were in a position to enter the market and will do everything that we can to fit in with the cultural sensitivities of “the Bali experience.”
Aren’t Tune hotels more suitable for business travellers or people transiting or stopping for a day or two? Because even budget vacationers demand the basics of a swimming pool, especially that we’re in the tropics. But Tune doesn’t have pools, so what makes you think your model will work here?
Bali and Malaysia share similar climates and the healthy occupancy of our hotels here indicate that the lack of a pool is not a barrier for the Tune Hotels.com model. While we do have guests staying with us for business purposes, the bulk of our guests are travelling for leisure.
Most of our clientele are out and about. They are immersing themselves in the attractions of the destination well outside the vicinity of the hotel and appreciate being able to spend less on accommodation basics, yet still having peace of mind that they’re getting a decent-quality room for the night.
Our model is to have guests spend less within the hotel itself, leaving more spending power to be activated within the local business ecosystem.
You obviously believe budget travellers from AirAsia’s market catchment will want to stay in your hotels in Bali. What is the demographic you are chiefly targeting there? And do you think there is a local – Indonesian – market for you as well?
We don’t limit ourselves to a certain demographic – our Malaysian hotels, similar to passengers on AirAsia, include guests from all walks of life. All income levels want good deals and a variety of choices and our growing occupancy figures indicate that people are willing to forego underutilised full-service facilities to get them.
Again the provision of choice to guests looking to travel to Bali is the most important reason. For consumers who are looking for and have the ability to afford a full-service break, complete with the villa/plunge pool experience etc, Tune Hotels.com Bali may not be on their list.
Having said that, we are popular among a predominantly youthful, somewhat urbanized crowd – 25-35 years – who have access to the internet and are comfortable with online purchases – 80 percent of our bookings are made online. Our clientele, many would be surprised to know, is still mainly local (average 70 percent local vs 30 percent foreign guests), though as word spreads about us online and we increase our presence on external distribution sites, we are getting more and more foreign guests. Bali is already an established tourist destination and we believe our entry into the Bali market will be welcomed by both Malaysian and foreign guests who have already experienced our hospitality in Malaysia.
Indonesians are getting a taste of our concept from our hotel in Penang, which is a popular destination for Indonesians on medical tourism and leisure trips. Feedback we have received from them has been positive so far. So we’re confident we’ll resonate with the local Indonesian population also once we arrive.
What facilities will be available?
Similar to all Tune Hotels.com hotels, our limited-service hotels in Bali will focus on high-quality basics: a 5-star bed and powerful showers, housed within a clean and secure environment, centrally located, and available at extremely affordable prices. We provide daily housekeeping services and through our cost-efficient pay-as-you-use system of add-ons for air-conditioning, laundered towels and any other energy-consuming facilities and amenities, we try to help guests conserve both their funds as well as the earth’s resources.
For the benefit of our guests, we will have convenience stores and food and beverage outlets within the premises of both the Kuta and Legian hotels.
What will room rates start at?
Room rates are always dependent on the country and the local environment and seasonality. For Bali, we are still working on this, but we anticipate that they will be affordable for the majority of travellers.
Is Tune Hotels.com the first of its kind in Bali?
Yes, we believe we are the first limited-service hotel in Bali. Undoubtedly other properties offer super low-rates or good, safe locations or great, modern basics; but we believe we’re first to combine these together in a consistent and reliable manner.
Is the success of Tune hotels part of an evolution of the travel and tourism industries, especially given the swift rise of low-cost airlines like AirAsia, whose offshoot AirAsia-X has just launched flights to Europe?
We certainly believe we are a relevant product for the times. With the weakening of the global economy necessitating a scaling back on discretionary spending, we offer a viable way for savvy travellers to still take much needed breaks. Travel for work is more necessary rather than discretionary, but everyone has to be smarter about using their limited resources. We enable our guests to conduct business as usual despite tough times and continue to power local economies through tourism spending.
Moreover, as more people subscribe to less wasteful, more resource-conserving lifestyles, our streamlined rooms and optional, pay-per-use system for energy-consuming amenities hold appeal for a growing number of conscientious consumers, regardless of the economic climate.
Do you think that in these cost-conscious times, this apparent shift toward economy spells trouble for full-service airlines and high-end properties?
We don’t pretend or even aspire to take over the entire marketplace. There will always be a need for different options throughout the spectrum of budgets. As long as the full-service/high-end players put in effort to provide value and service commensurate with the high rates charged, there will be a market for them. The issue is as consumers become smarter about optimising their resources, the bar on what constitutes good value and great service is constantly being raised, and this applies to the industry as whole. So all players, including ourselves, need to stay on their toes to stay relevant.
Brand recognition is very important, but what value do you see in melding this with the unique religious and social culture of Bali and its specific architectural expression?
We’re coming to Bali because we completely understand its appeal, much of which lies in its unique religious, social and cultural heritage and its extraordinary people. We believe that by establishing our presence in Bali, we will be providing an affordable, reliable hospitality product that will enable more people to experience the richness of Balinese traditions for themselves. In deference to Bali’s unique culture, we have taken care to incorporate Balinese elements into our building designs and staff processes.
Given the economic times, your Bali plans are obviously a longer-term prospect in relation to real profit. We don’t yet know where the global financial crisis will lead us, but it’s fairly clear discretionary spends such as tourism will suffer significantly at least in the short term. Does that impact on your immediate planning?
So far we have been privileged not to have seen too much of a dip in the demand for our hotels, possibly because the economic climate has encouraged exactly the kind of cost-consciousness that makes us so relevant. However, we remain focused on keeping operational costs low while continuously marketing aggressively to drive overall demand. In terms of expansion planning, there has been very little impact. If anything we are spurred on to keep building in as many locations as possible, leveraging on the better deals available for acquisition of sites, construction costs etc. Now more than ever is when our concept provides real value to a great majority of the population. We want to be sure that when “light appears at the end of the tunnel,” as it surely will, we will be well placed to continue providing that value across a larger network throughout the Asian region.
We all know that planning laws, such as they are, can be easily circumvented in Indonesia. Often there aren’t any. But local employment is another matter. That’s firmly in the hands of the banjars (local community councils). What training plans do you have in mind for local staff recruits?
While we deliver standard training programmes across all our hotel locations, we also strive to remain locally relevant in each and every community that we’re in. We believe that our training program complements the extraordinary hospitable nature of the people in Bali. Our training covers a wide spectrum of skill sets, namely communication, guest focus, interpersonal savvy and decision-making among others. Each hired employee will undergo various classroom modules followed by on-job training, prior to the hotel opening and, most importantly, still enable the first-class Balinese hospitality to shine.