Hotel groups eye China

BANGKOK: Bangkok-based hotel investment company Red Planet Hotels plans to expand into the Chinabudget hotel market with its partner Tune Hotels.

Positive forecasts of continued rapid growth in tourist and business travel on the mainland will see the partners building budget hotels in second-tier cities, Red Planet chief executive Tim Hansing said.

"We are not going to Beijing and Shanghai. Demand for budget hotels there might not be as strong as in fast-growing second-tier cities," said Hansing, formerly senior vice-president of Kingdom Hotel Investment and one of a group of financiers who established Red Planet earlier this year. "We will look seriously at the market in the first quarter of next year. And our first hotel is expected to be operating in the next 18 months."

As an investment holding company, Red Planet builds the hotels and Tune Hotels will operate them. Tune Hotels is part of Tune Group, the private investment group of Datuk Seri Tony Fernandes, founder and group chief executive of budget airline AirAsia.

"What do you get in a budget airline? You get your seat and seat belt. If you want more, you pay," Hansing said. "In our budget hotel, you get a quality bed, duvet, high-power shower by paying US$20 to US$25 (RM62.20 to RM77.75) per night. You pay for just what you use."

Adopting the budget airline concept, Tune offers limited-service hotel accommodation and employs a self-service online booking system encouraging guests to book early to enjoy lower prices. Using the demand-based pricing booking system, guests can book rooms online at prices starting from US$3, Hansing said.

The company has 1,025 rooms under development across six hotels in the Philippines, Thailand and Indonesia.

The planned entry into the mainland market means that Red Planet will compete with brands such as Motel 168, Home Inn, Jinjiang Inn and Green Tea Inn, which have already established a foothold on the mainland.

In a budget hotel report published by Companiesandmarkets.com, as of December 31 the mainland had 3,757 budget hotels, up one-third on the previous year.

The hotels offered a total of 412,840 rooms and the top 10 providers were Home Inns, Jinjiang Inn, Motel 168, 7 Days Inn, Hanting Inns & Hotels, GreenTree Inns, Super 8 Hotels, Ibis Hotels, Vienna Hotels and Hotel Home.

Hansing said Red Planet hoped to get a slice of the market by providing consistent services. The market was big enough to accept one more player, he said.

The company had US$50 million in equity and would ultimately seek a listing in three to four years in order to raise funds for expansion. — South China Morning Post