A site near Broadgate in the City of London has been confirmed as the location for the capital's second Tune Hotel, as funding for the development of 15 properties in the capital has been confirmed.
The budget brand of Tune launched into the UK in August with the opening of the 79-bedroom Tune Hotel Westminster, near Waterloo Station.
Raag Hotels has exclusive rights to operate Tune Hotel's franchised properties in London and will be investing over £100m in the business. It has engaged Queensway Hotels to manage its assets and has acquired the Tune Hotel Westminster, which has been running close to 100% occupancy since day one.
Growth of Tune Hotels in London will be through the purchase of land or secondary commercial properties for development as the brand's budget hotels.
Tune Hotels was set up in south-east Asia in 2007 by Tony Fernanades, the Malaysian entrepreneur behind low-cost airline AirAsia. Like low-cost airlines, the concept of Tune Hotels is based on an internet driven marketing model, where pricing is linked to demand with early bookings offering guests low rates. The average price paid at Tune Hotel Westminster is £50, while early bookers can be rewarded with a £35 rate.
Rob Mills, a partner at Mountgrange Investment Management said that Tune Hotels is an exciting concept because it meets a growing need in the market and provides great value for money to the customer.
"One of the most important elements of the new enterprise will be access to well-located development sites. We expect there to be a significant supply of secondary commercial buildings which can be made much more productive when converted to the Tune format."
Chief executive of Tune Hotels, Mark Lankester, said the new venture brings together people with complementary skills, networks and capital, enabling the company to speed up its development of 15 properties in London.
"They combine real estate deal-making capability and track record with substantial detailed operational hotel management expertise and financial know-how," he said.
By Janet Harmer
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