Bali in Budget Beds Battle

The Jakarta Globe, Irvan Tisnabudi

The new Tune Hotel in Kuta, Bali, which some hoteliers claim is using ‘predatory pricing.’ (JG Photo/J.P. Christo)

Hotel owners in Bali are crying foul over the latest arrival in Indonesia’s premier tourist destination.

They claim that Tune Hotels, the Malaysian budget accommodation chain owned by Air Asia founder Tony Fernandes, will “damage” the island’s image by offering spartan rooms for as little as Rp 98,000 ($10.5) a night.

Perry Markus, secretary general of the Bali Hotels and Restaurant Association, told the Jakarta Globe on Monday that other low-cost hotels were unhappy with the arrival of Tune in Kuta and Legian. “With such a low tariff, it is damaging to Bali’s image, which is to uphold quality tourism,” Perry said.

Perry declined to name the unhappy hotels but warned that if Tune does not increase its tariffs, they may report the company to the Business Competition Supervisory Commission (KPPU) for unhealthy business practices.

“We don’t want them to screw up the current situation, which we have been trying very hard to maintain. It’s been very difficult to increase hotel rates since the Bali bombings,” Perry said, referring to the bombs that killed 202 people and injured 204 in Kuta 2002 and another attack that killed 20 in Jimbaran and Kuta in 2005.

Using a similar model to Air Asia and other budget airlines, Tune Hotels eschew the usual frills such as swimming pools, spas and room service, but offer cut-price rates for basic, clean rooms with just a bed, hot shower and ceiling fan. Guests must pay extra for every additional service from towels to air-conditioning.

“Sometimes, all you really need from a hotel is a hot shower and a good night’s rest. Without risking robbery either stepping out of the room, or paying the bill,” Tune says on its web site.

Perry said the association will gather the protesting hotels together to share their views and plans to invite the management of Tune to talks at a later date.

Sendjaja Widjaja, director of Tune in Bali, dismissed the suggestion that the group is pursuing predatory pricing. “Not all the rooms will cost Rp 98,000. No hotel can survive on such a low tariff if it's fixed for all of the rooms.” He added that Tune would be happy to talk to the other hoteliers.

Several business leaders argued that the Tune concept will go down well in Bali.

“As long as the hotel can serve its guests well and satisfy them, then I think it has good prospects because tourists are now very service-oriented,” said Levita Supit, Chairwoman of the Indonesian Franchising and Licensing Society.

Anton Sitorus, head of research at property consultant PT Jones Lang LaSalle Indonesia, noted that Bali attracts many backpackers, for whom the Tune approach may well be appealing.

“These types of visitors look for low-budget hotels and Tune hotels has made some breakthroughs because unlike many cheap hotels in Bali, it is managed professionally,” Anton said.

However, Jacky Yatno, owner of the Barong Hotel, a low-cost establishment in Kuta, insisted that most incumbents were not bothered by Tune’s arrival.

“Tune is way behind a lot of hotels in terms of facilities, as they lack services such as swimming pools and gyms. All they're trying to do is maximize every inch of the small space they have and this does not result in good quality service,” he said.