Professional Documents
Culture Documents
MARKETING ANALYSIS
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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
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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Feringghi (Penang); Miri & Kuching (Sarawak); LCCT, Sepang; Danga Bay (Johor);
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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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.
vi) What is the marketing strategy applied by Tune Hotel? e.g.: marketing mix
xiii) What made Tune Hotel to implement such ‘limited concept’ service?
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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
• Tune Hotel’s color is the same with Air Asia Airline (red and white). Therefore,
• 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
• Under the intelligent shareholder and management team of Tune Hotel, the hotel
• Tune Hotel has its own competitive strategy which enables the hotel to survive in
• 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
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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
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
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
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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
--Core--
No-frill
hotel
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• 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
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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had been returned; lockers for rent for luggage storage and wireless surfing (Wi-fi) RM
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 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
• 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
that the hotel is not overbooked and helped to minimize such uncertainty. Therefore,
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• 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,
b) Enhancing services
• Consultation
customer’s current situation. In the Tune Hotel, the front line staffs play important
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
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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
• 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
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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
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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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’.
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
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-
c) Pricing strategy
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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plus 5% government tax and 10% service tax. The pricing strategy applied in
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,
e) Physical environment
materials, and other visible cues where all provide tangible evidence of a firm’s
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
comfortable.
f) Process
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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
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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
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.
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
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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.
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).
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
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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
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
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a) Strength
• Advance booking
Tune Hotel provided the services of advance booking via the website of Tune
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
• 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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• 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
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
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
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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
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
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
• 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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• 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
c) Opportunity
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
• 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
d) Threat
• Competition
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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
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
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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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
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.
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• 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
• 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.
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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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.
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
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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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
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
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Corridor
main door
Advertisement
room door
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