Budget hotel chain sees room for IPO

PUBLISHED : Wednesday, 18 July, 2012, 12:00am
UPDATED : Wednesday, 18 July, 2012, 12:00am


Red Planet Hotelsdata centres, a budget hotel investment and management firm, is seeking to go public in Hong Kong by 2015 as it tries to boost its presence in the emerging Asia market, including mainland China.

'We are looking at closing four or five deals on the mainland next year,' said Tim Hansing, chief executive of the Bangkok-based hotelier, which manages a portfolio of 20 hotels, valued at US$180 million, under the Tune Hotels brand.

Seven of the 20 hotels are operating in countries from the Philippines to Thailand and Indonesia. It will have 10 hotels open, with 1,623 rooms, by the end of the year. Shenzhen, Guangzhou, Shanghai, Beijing and Xiamen were also potential destinations on the firm's radar, he said.

Tune is a hotel brand mainly owned by Tony Fernandes, founder of Air Asia. It does not own or run the hotels, but lets franchisees manage them on properties it owns.

As one of its four franchisees, Red Planet said yesterday that it had acquired a 16 per cent stake in Tune Hotels for an unspecified amount.

The 'significant multimillion-dollar transaction' makes Red Planet the third-largest investor in Tune Hotels and gives it a seat on the board.

Marketing the hotels in a country such as China would be extremely tough without the brand power of Air Asia, which enables cross-marketing of hotels and flights, Hansing said.

Red Planet is 'closely owned' by 66 shareholders, including some private equity funds. It aims to launch two rounds of fund-raising - targeting US$120 million each - via private share placements in the next two years. By 2015, Red Planet plans to increase its portfolio of hotels to 80 to 100 in Asia. Hansing said the company planned an initial public offering in Hong Kong by 2015, to allow existing shareholders to liquidate their investments in Red Planet.

He said there was an undersupply of budget hotels in the region and the market was too fragmented, with a lack of strong brands providing consistent quality of service.

Asia is the fastest-growing tourist market in the world. The number of tourists was set to double to 1.8 billion by 2030, said the World Tourist Organisation, a UN agency. By then, Asia is expected to account for the biggest share of tourists globally.

Tune Hotels runs 24 hotels, with 3,859 rooms, around the world. Another 38 are in the pipeline, with 10,106 rooms, including its first in India, Australia and Saudi Arabia - as well as hotels in Thailand, Indonesia, the Philippines, Malaysia and Britain.