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									TUNE HOTEL MARKETING ANALYSIS   MOHD RIZAL KISMATH BATCHA (2007)




          MARKETING ANALYSIS




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   TUNE HOTEL MARKETING ANALYSIS                      MOHD RIZAL KISMATH BATCHA (2007)


                              Part A: Pre-trip preparation


1. Hotel Overview


    Tune Hotel is another brilliant idea from its co-founder Datuk Tony Fernandes, also

the founder and CEO of the low cost carrier (LCC) airline Air Asia when he addressed

the need for affordable, quality accommodation in Southeast Asia. Tune Hotel.com has

opened its first flagship “no-frills” hotel in Kuala Lumpur at Jalan Tuanku Abdul Rahman

on 9 April 2007. The no-frills concept hotel is the first in Asia. The hotel offered 173

single and double budget, limited service rooms. The founder of the hotel believes there

is still a big gap to be bridged when Tune Hotel set up its chain of no-frills hotels in the

country. Rapidly growing regional economies, coupled with the exponential growth of

LCCs, have generated an unprecedented volume of value-based travelers.


    The hotel’s sector is crying out for clean, safe branded budget accommodation in

major cities. The Tune Hotels.Com brand will deliver that need in destinations across

Asia. Customers can be sure of a quality ‘sleep and shower' experience, in a clean and

safe environment, and to choose the add-on facilities. It's a really exciting concept and

deem in looking forward to rolling it out across the region. Tune Hotels.Com claims to

offer "a five-star sleeping experience at a one-star price", with rooms charges start from

as low as RM 9.90 for customers who book in advance through the website.


    While Tune Hotels will enhance its services, it will also franchise its brand and

expertise to property owners from whom it has started to receive offers. The plan for

upcoming hotel locations include Kota Kinabalu (Sabah); Burmah Road & Batu




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   TUNE HOTEL MARKETING ANALYSIS                    MOHD RIZAL KISMATH BATCHA (2007)


Feringghi (Penang); Miri & Kuching (Sarawak); LCCT, Sepang; Danga Bay (Johor);

Kuantan (Pahang); Ipoh (Perak); Sandakan (Sabah); Kuta, Bali (Indonesia).


    Tune Hotels Sdn.Bhd. is 72.19 per cent owned by Tune Ventures Sdn. Bhd. while

Datuk Kalimullah Hassan and Lim Kian Onn hold 12.03 per cent each. Another 3.75 per

cent is held by Tune Hotels Employee Holdings Sdn. Bhd. The shareholders behind Tune

Ventures are Datuk Tony Fernandes (40 per cent), Datuk Kamarudin Meranun (30 per

cent), Dennis Melka (25 per cent) and Tune Strategic Investments Ltd (five per cent)

according to press reports. The Chief Executive Officer of Tune Hotel is Mark Lankester.




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       TUNE HOTEL MARKETING ANALYSIS                       MOHD RIZAL KISMATH BATCHA (2007)


2. Preparation for the interview session


        Before we went to Tune Hotel to have an interview session with the Chief Executive

Officer (CEO) of Tune Hotel; Mark Lankester, we had prepared some questions to be

asked during the question and answer session (Q&A). The questions prepared are based

on what we need to know further in detail besides the information we obtained from the

sources in order to complete this project. The questions prepared by our group are as

follow.


i)        What are the core and supplementary services of Tune Hotel?

ii)       Tune Hotel emphasizes more on revenue orientated or service orientated?

iii)      Is Tune Hotel a market leader?

iv)       What is the most critical problem faces by Tune Hotel?

v)        How many employees in Tune Hotel?

vi)       What is the marketing strategy applied by Tune Hotel? e.g.: marketing mix

vii)      How Tune Hotel keep contact with ex-customers?

viii)     Who are the competitors of Tune Hotel?

ix)       Is Tune Hotel under the management of Air Asia Airline?

x)        What are the future plans by Tune Hotel?

xi)       What is the financial situation of Tune Hotel?

xii)      What is the Tune Hotel target market?

xiii)     What made Tune Hotel to implement such ‘limited concept’ service?




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   TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


                               Part B: Detailed trip log book


1. Perception of the companies (expectation)


Before we get to the trip, our perception towards Tune Hotel is as follow:


    • The hotel is cheap in price and maybe the services provided are also consistent

       with the price which is low.

    • Tune Hotel’s color is the same with Air Asia Airline (red and white). Therefore,

       we thought this hotel is under the ownership of AirAsia.

    • Tune Hotel is not a widely known hotel. This is due to our group members who

       had no experience and knowledge about the hotel before the trip.

    • The pricing strategy implemented by the Tune Hotel is similar with the pricing

       strategy implemented by Air Asia Airline.

    • Under the intelligent shareholder and management team of Tune Hotel, the hotel

       will be very successful in the future.

    • Tune Hotel has its own competitive strategy which enables the hotel to survive in

       this stiff competitive market.

    • Based on the pricing, we had qualms about the quality of its services and the

       cleanliness of the building. We expect the hotel to be of a low quality hotel with

       old yet dirty facilities.




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   TUNE HOTEL MARKETING ANALYSIS                      MOHD RIZAL KISMATH BATCHA (2007)


2. Evaluation of Information


    18 of February 2008, once we reached Tune hotel in the central of Kuala Lumpur, a

sense of excitement flowed within the bottom of our heart. This is due to our perceptions

towards the hotel are different in reality. The hotel offers more than our first perception.

From the cold, clean and comfort environment to the kindness of the staff there really

made us surprised and more than what we expected.


    Much to our surprise, however disappointment does come into play. First and

foremost, we were disappointed not to have the chance to meet Tune Hotel Chief

Executive Officer (CEO) Mark Lankester. However, we did enjoy the question and

answer session (Q&A) with Daniel Chee - Assistant Hotel Manager (Operations), Safuan

Ghazali - Head of Training and V. Vengataa Naidu- Outsourcing Director. They had

provided us with good services from the beginning until the moment we left the hotel. We

had a good impression to Tune Hotel based on their staffs’ positive attitude to the services

that we perceive throughout the time we spent in Tune Hotel.




                                                                           Through      the

question and answer (Q&A) session and our investigation throughout the day we spent in

hotel, we had learned many new experiences. They answered our questions patiently and

clearly. Some of the questions that we had prepared were not been raised due to time

constraints but similar questions were asked by other groups. Thus, we do share the

information with other groups and here are the results:




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   TUNE HOTEL MARKETING ANALYSIS                        MOHD RIZAL KISMATH BATCHA (2007)




i) The core and supplementary services of Tune Hotel


    From the information we had generated from variety sources, we analyzed the core

and supplementary services provided by Tune Hotel through The flower of service

model. The figure 1 shows the flower of service which is divided into two categories.

The first categories named facilitating services which includes information, order taking,

billing and payment. The second categories named as enhancing services which includes

consultation, hospitality, safekeeping and exception.




                                             --Core--

                                              No-frill
                                               hotel




                             Figure 1: The flower of service




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   TUNE HOTEL MARKETING ANALYSIS                      MOHD RIZAL KISMATH BATCHA (2007)


• Core service

    The core service provided by Tune Hotel focuses on limited service concept. The

Tune Hotel offers single and double rooms for its customers. All Tune Hotel chain will

have the same attributes; hence the customers and travelers will know what to expect

even if they are in a Tune Hotel in a town they have not visited before. The hotel will also

have the same rate structure as Air Asia which starts from RM 0.01 per night if bookings

are made in advance, special promotion and non-peak period, but the price will fluctuate

from time to time. The average room rates will be about RM 59.90.


    Among the things that customers will expect to get are such as a good and

comfortable five star King Koil bed, including pillow and 250 thread duvets; a good

bathroom with “power shower”; clean and comfortable standard rooms with ceiling fan;

secure rooms, with chip-card access and 24 hours guarded security and CCTV cameras

placed throughout the hotel public areas; great central location and good customers

service for the price.


    In order to keep the price low, it offers none of these as part of the room charges such

as television or radio; refrigerator or mini bar; towels, soap or shampoo; private telephone

line; wardrobes; coffee table or chair; gymnasiums, swimming pools, breakfast and car

parking area.


    However, Tune Hotel provides the ‘add-ons” core amenities and facilities that are

charged separately such as air-conditioning: RM 4.90 for five hours and RM 9.90 for 12

hours; toiletries amenities and towels for RM10 but RM5 will be refunded when the item




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   TUNE HOTEL MARKETING ANALYSIS                        MOHD RIZAL KISMATH BATCHA (2007)


had been returned; lockers for rent for luggage storage and wireless surfing (Wi-fi) RM

9.99 for 24 hours.


a) Facilitating services


   • Information

    To obtain full value from any goods or services, customers need relevant

    information. Company should make sure that the information provided is both timely

    and accurate. To consider the importance of this aspect in term of giving customers

    accurate information, Tune Hotel has its own official website that would enable the

    customers to be easily attached to the information without any difficulty. Besides,

    customers will also stand a chance to mock-up the room in the Tune Hotel through

    the official website of Tune Hotel. The information provided by the official website

    is accurate, timely and reliable. Customers also can easily get the information from

    the front-staff through call or walk-in to the hotel.


   • Order taking

    Applications, orders and reservations come into play once the customers decided to

    rent a room. The process of order taking must be fast, polite and accurately so that

    customers do not waste time and endure unnecessary mental or physical effort. For

    Tune Hotel, the advance booking system took place under the order taking process.

    Customers can make a room reservation by online booking through the official

    website in advance of 3 months maximum. This advance booking system ensures

    that the hotel is not overbooked and helped to minimize such uncertainty. Therefore,

    customers would experience an easy, safe and efficient booking procedure.



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   TUNE HOTEL MARKETING ANALYSIS                      MOHD RIZAL KISMATH BATCHA (2007)


   • Billing

   Billing is common to almost all services. This is the one of the most vital aspect to a

   business. Thus, customers usually expect bill to be clear, informative and accurate.

   For Tune Hotel, the billing service is provided in detailed and accurately.


   • Payment

   After we had spent a night, we made our way out of the building which requires us to

   settle the payment. Therefore, this is also one of the important steps to a business and

   customers as well. For Tune Hotel, the payment can be made through Credit card,

   credit transfer, cheque and cash.


b) Enhancing services


   • Consultation

   Consultation involves a dialog to probe customer requirements and then develop a

   tailored solution. An effective consultation requires an understanding of each

   customer’s current situation. In the Tune Hotel, the front line staffs play important

   roles as a consultant to the customers. If customers face any difficulties or problem,

   they may just approach the front-line well trained staff to ask for help.


   • Hospitality

   Tune Hotel is a limited services concept hotel. Therefore, not everything will be

   provided. However, the hotel provides some of the hospitality-related services such as

   a charming greeting; clean toilets and washrooms in the lobby; comfortable waiting

   area and seating; air-conditioned environment; magazines; security; internet access




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TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


room; money changer kiosk; automated teller machine (ATM); 5 star bed; power

shower; clean and fresh environment; 24 hours convenience shop; F&B outlet; cafe

and money changer kiosk.


• Safekeeping

Tune Hotel stress on its customer’s safety and enhance its security level. Therefore, a

secure keylock system, 47 CCTV cameras are located throughout the hotel with 24

hours surveillance. Besides, the hotel also provides a space for customers to keep

their luggage.


• Exception

Exception involves supplementary services that fall outside the routine of normal

service delivery. Tune Hotel always handles customers’ exception in a positive way

and in a good manner. The staff deserved a good acknowledgement.




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      TUNE HOTEL MARKETING ANALYSIS                    MOHD RIZAL KISMATH BATCHA (2007)


ii)      Is Tune Hotel a market leader?

      Tune Hotel is categorized as service industries. Tune Hotel aims to take advantage

of the growing budget hotels segment to push its expansion plans in the future. The

expansion plan offers the company an exciting opportunity to fill in the large gap of

quality branded no-frills accommodation in South East Asia region. The company sees a

huge upside in Asian tourism market over the next 4-5 years. For now the company will

focus on the Malaysian market to build up its image position and experience.


      For now Tune Hotel can be considered as the market leader in the no-frills budget

hotel in Malaysia and also in South East Asia nations. This is because Tune Hotel is the

first to come out with this kind of creative and innovative concept in Malaysia and there

is still no company or hotel that claims to be in the same market segment. As the first and

leader of the no-frills segment, Tune Hotel can make use of the opportunities while there

are still no direct competitors in this market segment in strengthening its business roots

and establish a strong position.


         In this case Tune Hotel surely will follow the same strategy of its co-founder

Datuk Tony Fernandes in what he did to Air Asia when he first introduced the low cost

carrier in Malaysia. Now Air Asia established a very strong position in the no-frills airline

market in Malaysia and Asian region despite some company had copied its business

strategy. As the first and leader of the market, Tune Hotel has the privilege to set up the

service standard. However, this advantage will not stand for long as other firms will

achieve such scale which will bring about big threat to Tune Hotel.




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       TUNE HOTEL MARKETING ANALYSIS                   MOHD RIZAL KISMATH BATCHA (2007)


iii)      The marketing strategy implemented by Tune Hotel

To capture the distinctive nature of service performance, the original terminology of

4Ps’(product, place and time, price and other user outlays, and promotion and education)

in marketing mix had been modified and extended the mixture by adding four other

elements associated with service delivery which includes the physical environment,

process, people and productivity and quality. These eight elements are referred to as 8Ps’.


           a) product / service element

           Tune Hotel provides services which orientated to the concept of no frill. The

           details of the core and supplementary services provided in Tune Hotel had been

           discussed in core and supplementary services part.


           b) Place and time

           Tune Hotel Kuala Lumpur is situated at the central of Kuala Lumpur in Jalan

           Tuanku Abdul Rahman and it is easily assessable by LRT and buses. It’s also not

           far away from popular spot, major shopping and entertainment areas. The check-

           in time is 2pm and the check-out time is 12pm.


           c) Pricing strategy

           The pricing strategy applied by Tune Hotel is in the range of RM0.01 to

           RM99.90. The price will vary in peak season, promotion period and advance

           booking period. Under the advance booking system, customers will get cheaper

           price if booking made in advance and the rate will be different from time to time

           depending on the period. However, the taxation is excluded in the range of price

           of RM0.01 to RM99, 90. The actual prices paid by the customers are core price




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TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


    plus 5% government tax and 10% service tax. The pricing strategy applied in

    Tune Hotel is the same as Air Asia Airline.


    d) Promotion and education

    Promotion plays a vital role in marketing. Promotion plays a role in providing

    needed information and advice; persuading target customers and encourages the

    customers to take action at the specific time. Tune Hotel runs the promotion

    through the advertisement in the Air Asia Airline official website, newsletter,

    newspapers and in the official website of Tune Hotel.


    e) Physical environment

    The physical environment includes the appearance of buildings, landscaping,

    vehicles, interior furnishing, equipment, staff members’ uniforms, signs, printed

    materials, and other visible cues where all provide tangible evidence of a firm’s

    service quality. Service firms need to manage physical evidence carefully,

    because it can have a profound impact on customers’ impression. Tune Hotel

    stresses on the clean, beautiful and comfortable physical environment. From the

    lobby to the rooms, the environment in Tune Hotel is clean. Besides, the

    handcrafted gallery design along the wall of the corridor and the room instilled a

    sense of relaxation to the customers. The overall building in Tune Hotel is

    comfortable.


    f) Process

    Creating and delivering product element require designation and implementation

    of effective processes. Customers are often actively involved in these processes.




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 TUNE HOTEL MARKETING ANALYSIS                   MOHD RIZAL KISMATH BATCHA (2007)


     Badly designed processes will lead to slow, bureaucratic, and ineffective service

     delivery, wasted time and a disappointing experience. The process in Tune Hotel

     from the booking process to the moment customers left the hotel can be shown

     in blueprint diagram (Figure 2) in below.




Search                       2. make reservation                  3. Confirmed
information                                                       reservation
(Hotel official              (online advance
website                      booking)                             Make payment
www.tunehotels.                                                   through Credit card,
                             Accept reservation                   cash transfer, etc
com)                         Confirm date, time and               Get the reservation
Quality                      party                                confirmation
Price                        Check availability                   number.


6.Cutomers                     5. Add on services                   4. Check in
 Check the
 facilities and                Top up for the air-                  Check reservation
 amenities                     conditioner usage (if                Update account
                               needed)                              Get   the    secure
Make sure                      Pay     and        receive           keylock card
everything in good             amenities kit (if needed)
                               Others add on services



  7. Extra service                               8. Check out

  If customers                                   Return the card
  request any extra                              Full payment made
  service or make                                Customer feedback
  any complaints,                                form.
  staff is ready to                              Clean the room

          Figure 2: The total experience of a customer
                          in Tune Hotel



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      TUNE HOTEL MARKETING ANALYSIS                    MOHD RIZAL KISMATH BATCHA (2007)


          g) People

          According to Safuan Ghazali - Head of Training, the total number of staffs in the

          hotel is 11 people which include the front-line staff and security guards. All the

          employees in the hotel are trained in term of providing better services to the

          customers because they represent the hotel’s image. However, the strong

          management teams consist of 22 expertises. Thus, all the employees reflect the

          core asset and sole determinant to the success of the company.


          h) Productivity and quality

          Improving productivity is essential to any strategy for reducing cost. Improving

          quality is essential for service differentiation and for building customer

          satisfaction and loyalty. Tune Hotel uses the outsourcing strategy to save the

          operation cost and to improve the productivity of the hotel. After the interview

          session, we found that our earlier perception towards low price equal to low

          quality in Tune Hotel is wrong in this manner. In fact, although the price is low

          but the quality of the services can be compared with other budget hotels.


iv)      How Tune Hotel keep contact with ex-customers?

Customers are one of the key determinants for the success of the company. For Tune

Hotel, it not only targets ex-customers but also an eye for new customers. In order to

build a strong relationship with the customers and to keep in touch, Tune Hotel did not

implement the strategy of sending the promotion broachers, voucher, SMS and call. But

they will send the newsletters to the customers who subscribed to them which will keep

the consumers updated with the newest information and promotion.




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       TUNE HOTEL MARKETING ANALYSIS                 MOHD RIZAL KISMATH BATCHA (2007)


v)        Is Tune Hotel under the management of Air Asia Airline?

We had a perception where we believed Tune Hotel is associated with Air Asia Airline

due to the red and white color of the building and the pricing strategy. Besides, the

founder of Tune Hotel is Tony Fernandes who is the CEO of Air Asia Airline nowadays.

This makes us misperceptions that Tune Hotel is under the management of Air Asia

Airline. However, after the interview session, we found that our perception is wrong.

Tune Hotel is totally operating separately from Air Asia Airline and managed by a

management team who does not have any relationship with Air Asia Airline.


vi)       What are the future plans by Tune Hotel?

As mentioned in the hotel overview part, Tune Hotel will develop some of the hotels; it

will also franchise its brand and expertise to property owners from whom it has started to

receive offers. The plan for upcoming hotel locations include Kota Kinabalu (Sabah);

Burmah Road & Batu Feringghi (Penang); Miri & Kuching (Sarawak); LCCT, Sepang;

Danga Bay (Johor); Kuantan (Pahang); Ipoh (Perak); Sandakan (Sabah) and Kuta, Bali

(Indonesia).


vii)      What is the financial situation of Tune Hotel?

According to V. Vengataa Naidu- Outsourcing Director, for now the financial situation for

Tune Hotel is still positive. However, we do not know the real situation due to failure in

getting the financial statement from the company as this is confidential. From the

information we gathered, we know that the advertisement from Johnson Suisse, Pensonic

Holding, CIMB Bank, Nippon Paint, Orlando, Maggi and Marigold Berhad are the main

revenue generators to the hotel.




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      TUNE HOTEL MARKETING ANALYSIS                MOHD RIZAL KISMATH BATCHA (2007)


viii)    What is Tune Hotel’s target market?

The target markets of Tune Hotel can be divided into three groups which include the

foreign travelers, locals’ travelers and drop-in customers. In our opinions, we had an

experience towards the service provided by the Tune Hotel; however, we will recommend

Tune Hotel to certain people such as young singles, backpackers and tourists. Contrary,

we will not recommend Tune Hotel to people with disabilities, pet owners, and families

with young children and teenagers.


ix)      SWOT analysis


           Strength                                     Weakness
 Advance booking                               Limited service
 Outsourcing                                   Limited      number    of
 Staff training                                consumers       round the
 Great central location                        country are aware of Tune
 Fresh      and     innovative                 Hotel
 business idea                                 Seedy location
 Strong strategic partners



          Opportunity                                      Threat


 Tune hotel can reach more
 consumers     via   effective
 marketing strategy                            Competition
 Consumer satisfaction and                     outsourcing
 support
 The first and market leader




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   TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


a) Strength


   • Advance booking

      Tune Hotel provided the services of advance booking via the website of Tune

      Hotel. (http://www.tunehotels.com). This advance booking service through internet

      helped to minimize uncertainty regarding the hotel. The issue of overbooking

      never happened in the hotel with such excellence in the booking system. Besides,

      customer can book the rooms 3 month in advance, the earlier you book the room,

      the cheaper rates you will get. Customer can make the payment through credit

      card, cheque, cash transfer and others payment mode.


   • Outsourcing

      In order to save cost, one of the strategies applied by Tune Hotel is outsourcing. In

     Tune Hotel Kuala Lumpur, the housekeeping, Uncle John Kopitiam, 24 hours

     convenience store 7 eleven, money changer kiosk, Subway and CIMB ATM and

     Bureau de change are indeed part of outsourcing. This strategy had helped Tune

     Hotel to save a big amount of cost. However, although these are under third parties,

     Tune Hotel always keep in touch with the management of those companies in order

     to make sure the services provided are at a satisfactory level and in the right track.

     Tune Hotel also stressed on the good relationship between Tune Hotel and the third

     parties.




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TUNE HOTEL MARKETING ANALYSIS                      MOHD RIZAL KISMATH BATCHA (2007)


• Staff training

Tune Hotel spend a big amount in training its’ employees. The purpose of providing

such intense training programme is to ensure the quality of the services provided by

the front desk staffs. According to Safuan Ghazali, the Head of Training, the total

numbers of staffs in Tune Hotel Kuala Lumpur are 11 people. The positions include

receptionist in the front desk and security guards only. Besides, that’s the reason Tune

Hotel do not provide room services. The room cleanliness, 24 hours convenience

store, kopitiam and meal store are part of outsourcing line, therefore these staffs are

not under Tune Hotel responsibility to be trained. Besides, Tune Hotel also has a

intelligent management team who will make ends meet.


• Great central location

Tune hotel strategy is to locate its hotel in the centre of the cities or tourist belts of

resorts which will reduce the customers’ transportation cost. For example its flagship

hotel in Jalan Tuanku Abdul Rahman is situated in the heart of Kuala Lumpur and

easily assessable by LRT and buses. It’s also not far away from popular spot, major

shopping and entertainment areas.


• Fresh and innovative business idea

Implementing the no-frills concept, bring in some real innovation in the hotel

industry by combining style with budget, mixing the chic with affordable rates and

allowing customers to add features as they desired them, subsidizing customers fare

with strategic location and highly creative advertisements; all which represent the

creativity of strategy implemented.



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TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


• Strong strategic partners

Tune Hotel.Com teamed up with several strategic partners such as Pensonic Holdings

Bhd, Nippon Paint (M) Sdn.Bhd. and Johnson Suisse (M) Sdn. Bhd. for various

outfitting items. They also named each floor of its hotel building after a sponsor such

as King Koil, Pensonic, CIMB Bank, Nippon Paint, Orlando and Maggie,

respectively. These strategic partners give Tune hotel the ability to generate income

by fully capitalizing its building capacity. Strong relationship with Air Asia is one of

the biggest advantages of Tune Hotel.


    After the interview session, we had a precious opportunity to explore from floor

to floor. From then, we can see that each floor have different design based on the

design, color and logo from the advertisers. King Koil advertisement can be seen

along the corridor in the first floor; Pensonic Holding advertisement in the second

floor; CIMB bank in third floor; Nippon Paint in the fourth floor; Orlando in the fifth

floor; Maggi in the sixth floor and finally Marigold advertisement in the seventh

floor. The wall gallery design along the corridor is unique and attracted most of us.




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b) Weakness


   • Limited level of awareness about Tune Hotel

   Before we knew we were heading to Tune Hotel, we sort of lacking information as

   most of us never heard of this hotel. We identified some of the reasons behind such

   low exposure. Among the reason is the promotion strategy implemented by Tune

   Hotel is not effective enough. Besides, the hotel is a brand new hotel and had

   operated less than a year. This might be one of the reasons. However, under the rapid

   development of Tune Hotel in Malaysia, we believe that the hotel will be recognized

   as one of popular spot for all walks of lives.


   • Seedy location

   Cheap price coupled with the strategic location prove to be beneficial. However, Jalan

   Tuanku Abdul Rahman is a place where illegal immigrants and homeless people

   congregate. It is also close to Lorong Haji Taib where immoral activities such as

   prostitution, drugs and crime are inseparable, same as Jalan Alor and Tengkat Tong

   Shin. This might contribute to the low level of occupancy due to the level of security

   and safety.


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   TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


   • Limited service

   Being a budget hotel does not mean everything has to be limited and cut off. Tune

   Hotel decided not to include basic necessities for customers; boiler and drinking

   water and even not enough hooks to hang clothes. The bathroom’s door cannot be

   locked and chairs are not provided as well.


c) Opportunity


   • The first and market leader

   As the first no-frill concept hotel in Asia, Tune Hotel is sitting comfortably in this

   market without being pressured by any competitors. Such limited services provide a

   base for Tune Hotel to save a big sum of cost which can be used for other purposes.

   Cost of operation can be lowered due to the small group of staffs and higher revenue

   due to effective pricing strategy.


   • Tune hotel can reach more consumers via effective marketing strategy

   Air Asia Airline and Tune Hotel can be said as sibling in no-frills concept industries.

   The successful of Air Asia Airline will mirror the future achievement of Tune Hotel as

   well. Tune Hotel will stand a chance to gain large market share via effective

   marketing strategy and efficient management team. First and foremost critical

   problem to Tune Hotel is to persuade the perception of customers toward the no-frill

   concept that still fresh in the hotel market.



d) Threat


   • Competition


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   TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


   Tune Hotel is the first limited services concept hotel in Asia. Therefore, Tune Hotel

   does not have any direct competitor for now. However, Tune Hotel had indirect

   competition from the budget hotel and others famous and branded hotel in the city of

   Kuala Lumpur to be considered. The competitors of Tune Hotel in the field of

   budgeted hotel include Mayview Glory Hotel, The Heritage Station Hotel, Garden

   City Hotel, Comfort Inn Sdn Bhd and Hotel Chinatown 2. The pricing in these

   budgeted hotels are more or less the same with the Tune Hotel.


   • Outsourcing

   Outsourcing is vital in reducing the operation costs and to achieve large economies of

   scales which generate higher revenue. However, if the outsourcing firms failed to live

   up to its’ reputation, it will both directly and indirectly affect the satisfaction of

   customers. Therefore, outsourcing strategy will have both positive and negative

   impacts to the business. Thus, Tune Hotel must develop strong relationship with third

   parties to ensure productivities.




                             Part C: Perception and evaluation


1) Evaluation of the service environment- The Russell Model of Affect


In term of evaluation toward the service environment in Tune Hotel, we evaluated it

through The Russell Model of Affect. In the model, there are two main dimensions which

are arousal and pleasure. The element between arousing and pleasant is ‘exciting’. The

‘exciting’ environment will satisfy customers towards the service environment perceived.

Relaxing is in between the element of ‘pleasant’ and ‘sleepy’ which will contribute to the


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   TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


sense of relaxation to the customers while being in the service environment. ‘Exciting’

and ‘relaxing’ are towards the positive perception to the service perceived. Contrary, the

element between ‘unpleasant’ and ‘sleepy’ are ‘boring’ and element between ‘unpleasant’

and ‘arousing’ is ‘distressing’. These are the negative perception for a customer towards

the service environment.


                           Figure 2: The Russell Model of affect



                                Arousing


                    distress                 excitin
                       ing                     g
 Unpleas
   ant                                                             pleasant

                      boring                 relaxin
                                                g


                                  sleepy


   • Exciting

    For Tune Hotel, the environment contributed to the sense of excitement to our groups

    members are the five star King Koil bed, the power shower, the handcrafted graphic

    design on the wall along the corridor and in the room, the friendliness and kindness

    of the staffs in hotel, the clean and comfort environment and the unique

    advertisement from floor to floor where the design of the floors are based on the

    colors of the advertiser. These are the new experiences for our group members.

    Therefore, we are feeling excited about these entire service environment.



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   TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


   • Relaxing

    The five-star King Koil bed and the power shower gave us a comfort sleep and a

    refreshing shower. Besides, we also enjoyed the beverages in the Uncle John

    Kopitiam and the internet services in the cyber café. The Internet café is free of

    charge for in-house guests.


   • Boring

    Upon our arrival at Tune Hotel’s doorstep, we were greeted by the person in charge

    and were entertained while waiting to check-in. At this moment, we felt boring as

    there are no entertainments at the lobby and we cannot really move around due to the

    small space. Basically, we did nothing while waiting for our rooms to be ready.


   • Distressing

    Some of the inconvenience and lack of facilities had made us felt distressing. The

    low ceiling fans, bathroom door with no lock, absent of hose in the toilet, limited

    number of security door card and absent of private telephone room had distressed us.

    We were unable to have our own privacy even at times of bathing.


2. Solution or recommendation


    Tune Hotel is the first no-frills concept hotel in Asia. Therefore, it has problems in

persuading the local consumers to change their perception towards the new concept.

Therefore, Tune Hotel should effectively promote their services and educate the targeted

consumers regarding the benefits of the limited-service concept. For instance, Tune Hotel

might run a road show or promotion days to the public and delivers the correct and

accurate information to the public so that the people will stand a chance to have a real


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   TUNE HOTEL MARKETING ANALYSIS                     MOHD RIZAL KISMATH BATCHA (2007)


view towards the hotel. Consequently, the uncertainty of the public towards the hotel can

be reduced through effective promotion. Thus, Tune Hotel will gain a prominent share in

the market.


    The pricing strategy implemented by Tune Hotel is considered as manipulating the

customers’ mind. This is due to the actual price paid by the customers exceeds the price

that customers are willing to pay. For instance, the promotion of RM0.01 cent per night

per room is actually not the actual price paid by the customers. The actual price paid

includes the core price plus the 5% government tax and 10% service tax. Therefore, if

customers lack information about the pricing strategy implemented by the hotel, it will

result in dissatisfaction for customers and might risk losing such potential customers.

Besides, the promotion rate for rooms of RM 0.01 is very limited. The possibility to

obtain such room is very low. This might cause customers to feel that they are not getting

what they wanted as offered by the hotel.


Conclusion


    In a nutshell, Tune Hotel has been putting much effort in implementing the no-frills

concept hotel and in cultivating such culture into our population. Therefore, as a market

leader in the limited service hotel, Tune Hotel is said to be sustaining such concept in

surviving in the market with strategies implemented with thorough researches while

maintaining the level of customers’ expectation and satisfaction. Tune Hotel follows a

path which is different from other hotels where it focuses on two basic necessities; sleep

and shower. Based on these aspects, they developed a strategy which provide five-star

King Koil beds and power shower system. After all, they claim that what travelers really




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   TUNE HOTEL MARKETING ANALYSIS                      MOHD RIZAL KISMATH BATCHA (2007)


need is a good night sleep coupled with refreshing shower. Besides, they focus on

convenience and security as well to protect customers from any possible danger. The

major contributor to the success of the hotel is the pricing strategy which range from

RM0.01 to RM99.90. The manipulative pricing managed to attract a great deal of

travelers and even locals as well. The effectiveness of its website in promoting such low

prices tend to lower the operation and advertising costs due to the fact that its website is

automatically linked to AisAsia website. The company’s structure such as small group of

staffs, absent of room services and other facilities serve as a base to boost its revenue

without being wasted on these perspectives. We believe that Tune Hotel managed to pull

it off in its own way in providing such limited services to a large market segment.

Though it just started operating not more than two years, its positive cash flow begins to

signal its potential in the coming years. Through experiences and researches on

customers’ feedback and behavior, these will act as an upper hand for Tune Hotel to

continue to strive on improving its weaknesses and to upgrade the customers’ satisfaction.


                                       Appendix




Interview session with Daniel Chee - Assistant Hotel Manager
(Operations), Safuan Ghazali - Head of Training and V. Vengataa Naidu-
Outsourcing Director. (From right to left)


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  TUNE HOTEL MARKETING ANALYSIS   MOHD RIZAL KISMATH BATCHA (2007)




            Corridor
main door




            Advertisement
room door




             Lobby                                Front desk




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  TUNE HOTEL MARKETING ANALYSIS      MOHD RIZAL KISMATH BATCHA (2007)




 Money changer kiosk in Tune Hotel             Free online internet
corner




         ATM Machine                          security equipment




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 TUNE HOTEL MARKETING ANALYSIS   MOHD RIZAL KISMATH BATCHA (2007)


   5 Star King Koil Bed                          Power Shower




  Switches in the room
adjustable table




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