Red Planet Hotels Limited

Red Planet Hotels has invested in a 16.05% stake in the rapidly expanding Tune Hotels operation as both companies seek to grow the booming low cost hotel brand.

The deal cements Red Planet Hotels – who is a major franchisee of the brand across South-East Asia – as the third largest investor in Tune Hotels with 9,975,038 shares, providing further value to Red Planet Hotel's shareholders.

This major investment also results in Red Planet Hotels being invited to take up a seat on the board of directors, enabling Red Planet Hotels to be actively involved in the future of one of the world's fastest growing hospitality concerns.

While the value of the deal remains undisclosed, it is a "significant multi-million dollar transaction" and the largest single corporate investment Red Planet Hotels has clinched in its two-year history.

The investment in Tune Hotels comes at a time when Red Planet Hotels' latest round of fund raising was over subscribed and the company now has US$180 million of hotel projects (containing 3,191 rooms) either operating or under construction in Asia.

Red Planet Hotels Chief Executive Officer, Tim Hansing, said the investment represented Red Planet Hotel's pledge to the brand and the founding members' vision for the Tune Hotels concept.

"This significant investment and commitment to the Tune Hotels brand is indicative of Red Planet Hotels' well-balanced long-term development programme and provides tremendous value growth to our existing shareholders," Mr Hansing said. "As we move towards becoming a major owner and operator of Tune Hotels properties, this investment and endorsement of Tune's board and management allows Red Planet Hotels to participate and contribute constructively and meaningfully for the benefit of both companies."

Tune Hotels has quickly established itself as the leading player in the low cost hotel space just as AirAsia did in the low cost airline industry.

Established in 2007, there are currently 24 Tune Hotels operating 3,859 rooms globally.

There is a confirmed additional pipeline of 38 more hotels with 10,106 rooms, including the first hotels in India, Scotland, Australia and Saudi Arabia along with additional properties in Thailand, Indonesia, the Philippines, Malaysia and England.

By the end of 2012 Red Planet Hotels will have 10 operating hotels with 1,623 rooms in Thailand, the Philippines and Indonesia.

This month, it opened the first Tune Hotel in Jakarta, Indonesia (168 rooms) and a fourth in the Philippines in Makati (215 rooms).

Later this year, Red Planet Hotels will open Tune Hotels in Asoke, Bangkok (130 rooms - September), Pekanbaru, Sumatra (143 rooms - December) and Patong, Phuket (150 rooms - December).

The largest shareholder in Tune Hotels remains Tan Sri Tony Fernandes.