Tune Hotel sale to fund AirAsia CEO’s Ireland venture

Air Asia chief executive Tony Fernandes and his Singapore partner Plato Capital have pocketed nearly $52 million from the sale of the Tune Hotel Melbourne, with plans to invest the profits in a similar budget-style hotel in Dublin, Ireland.

Funds from the sale of the three-star, 225-room property fronting 609 Swanson St, Carlton, will also be used to fund the acquisition of other properties or sites, according to a note to the Singapore Exchange.

Acquisitive Sydney-based unlisted funds manager Aligned FM bought the property on behalf of a cashed-up private investor and is likely to retain it as a Tune-branded hotel, at least in the short term.

Demonstrating the strength of the Melbourne hotel market, the property had a net book value of $33 million.

Fernandes says he wants to develop at least 20 Tune Hotels in Australia and New Zealand but to date there has only been the Melbourne property

It owed the existing financier $20 million as at December 31.

Selling agent CBRE director Wayne Bunz says the hotel was sold with the management agreement in place, and that Tune would continue to run the business.

Bunz sold the hotel with Scott Callow, also of CBRE, noting that CBRE had sold $200 million worth of hotels so far this year.

The Tune Hotel in Melbourne has sold for $52 million.

Fernandes suffered a blow last year when Red Planet Hotels, which owns and operated 21 Tune Hotels in Asia, ceased its partnership with him. Red Planet Hotels bought a 16% stake in Tune Hotels nearly four years ago.

Fernandes, who could not be reached for comment, is a co-founder of the leisure and entertainment operator Tune Group, which invests in hotels, aviation, financial services, Formula One racing and Champions League soccer.

The group had originally expected to have 100 Tune hotels operating worldwide by 2016

Fernandes says he wants to develop at least 20 Tune Hotels in Australia and New Zealand but to date there has only been the Melbourne property.

The Tune hotel chain offers basic budget accommodation, and guests pay for additional services such as air conditioning, television, room cleaning and towels.

At one stage Tune planned to open hotels in Sydney and Perth as well as the Gold Coast, Darwin and possibly even Brisbane.

Tune has one hotel operating in India, two in Indonesia, 12 in Malaysia and four in Britain. The group had originally expected to have 100 Tune hotels operating worldwide by 2016.

This article originally appeared on www.theaustralian.com.au/property.