Fancy a room for just US$3 plus taxes in a major Southeast Asian city? A no- frills hotel opened yesterday in Kuala Lumpur that its owners hope will make waves in budget accommodation across the region. The first in a chain expected to expand across Malaysia and the region, the 173-room inn run by TuneHotels seems to be off to a promising start. Launched by the founders of low-cost carrier AirAsia, it has sold 3,500 rooms for the next six months since online booking began in March. Tune director Dennis Melka says the idea of starting a no-frills hotel was born as AirAsia expanded its route network and started flying to towns such as Kota Kinabalu and Kuching in east Malaysia. 'The feedback was that while one could fly for less than M$100 [HK$228], there were either no hotels at that price or that those in that price range were in horrid condition,' Melka says. While budget accommodation is available throughout Malaysia, most of it is in poor shape. 'We went to Penang to check out the market,' Melka says. 'For less than US$20, the rooms available had cockroaches, messy beds and even vice activities. Yet they were running at 80-90 per cent occupancy.' The company hopes to fill a gap in the budget hotel market by offering clean, safe rooms and convenience. TuneHotels is touting its establishments to 'anyone wanting a good night's sleep at a good price', Melka says. Regular travellers such as Kuala Lumpur real estate agent Jimmy Sidhu are excited at the prospect of a no-frills hotel chain in Asia. Sidhu is familiar with the concept, having used chains such as All Seasons and Formule 1 on holiday in Europe. 'For #10-#19 [HK$150-HK$296] a night I wasn't expecting anything but a clean room, a powerful shower and security. I was on the road most of the day and only spent six to seven hours in the room, so it met my needs.' Previndran Singhe, a property adviser to the hotel sector, says the growth of low-cost carriers has brought about a travel boom in Asia, with swelling ranks of business travellers and tourists wanting cheap but comfortable accommodation. Although room rates have been rising steadily across the region, Asia lacks economy hotels with a recognised brand name. 'Travellers either stay at a full-service four- or five-star hotel or pay economy prices and stay at substandard hotels,' he says. The closest thing Asia has to limited-service accommodation are Japan's capsule hotels. Measuring two metres by one metre by 1.2 metres, they are modular plastic or fibreglass pods with room to sleep and little else. Introduced in the late 1970s for salarymen, they have failed to take off outside Japan. But budget hotels are big business in the US and Europe, where they account for 70 per cent of the industry, Previndran says. Apart from international hotel chain Accor's Ibis inns and Formule 1 hotels, Europe's limited-service hotels include Easy Group's easyHotel and Holiday Inn's Express. The US has Days Inn. The untapped opportunity hasn't escaped the attention of bigger hotel operators. Singhe says regional groups are moving into the budget sector. The first Holiday Inn Express is expected to open in Dubai next year with 240 rooms and there are plans for a further 20 in the Middle East and up to 20 in Asia. Meanwhile, easyHotels is planning developments in New Delhi, Mumbai, Chennai and Kolkata. In Malaysia, Tune plans to open a hotel in Penang and two in Kota Kinabalu early next year. Having raised capital of US$75 million, Melka says the company plans to be operating 40 hotels in Southeast Asia by the first half of 2009, at sites such as Kuala Lumpur International Airport, on Langkawi island and in tourist hubs such as Bali, Bangkok and Siem Reap. Modelled on limited-service and no-frills hotels such Britain's easyHotel chain, Tune rooms come with a single or double bed, a ceiling fan and an en suite bathroom. Air conditioning and TV cost extra. Single and double rooms are 9-19 square metres in size and are extremely basic, lacking wardrobes, mini-bars, tea-making facilities, telephones, towels and even complementary toiletries. Tune uses a pricing system similar to AirAsia's - the earlier you book, the cheaper the room. As a result, rooms can cost as little as 30 US cents. But just like on the airline, not much capacity is offered at such prices - typically 8 per cent or less. Rooms cost between US$3 and US$25 per night, with the average rate being about US$15. There is also an administration fee of some US$2 and government tax and service charges amounting to 15 per cent of the room's price. Dispensing with such facilities as swimming pools, gyms and coffee shops also keeps prices down, although at the Kuala Lumpur hotel there is sponsored internet access and space leased to restaurants and convenience stores. Each floor also has a corporate sponsor, with corridors and stairways bearing advertisements. Melka says security is a priority. 'It's a safe place to stay, especially for the single woman traveller,' he insists. The rooms have key-card access and there are closed-circuit TV cameras in common areas and round-the-clock security in the lobby. Previndran says most budget-hotel investors will collaborate with no-frills airlines for joint promotions. AirAsia founders Tony Fernandes and Kamarudin Meranun own 49 per cent of Tune and Melka says the company is working with the airline to develop fly-and-stay deals. But while the prospects for Tune may appear rosy, Melka doesn't discount the challenges facing the company. It took Asian consumers nearly five years to embrace budget airlines and the idea of no-frills hotels may require a similar gestation period. 'But consumers will catch up,' he says.