Tune Hotels offers a template of how to start, manage and scale up a chain budget hotels and my review of the Tune Hotel on Westminster Bridge Road really opened my eyes to how a budget hotel chain works. 

It's not as simple as it looks, because to create an economically-feasible operation you have to start right back at first principles – this is something Tune Hotels has done well, rethinking and reengineering all aspects of a hotel.

Site acquisition is the first priority.  That's important for Tune right now, as the chain has a growth strategy to expand its brand in London from 1 to 15 hotels by 2015.  That's a tall order. 

It's already working on a new hotel in Folgate Street near the City, which will open in January next year and provide 183 rooms (the current Westminster hotel only has 79) – but that leaves a large number of further sites to acquire and competition is fierce.

Not least from the likes of Travelodge and Premier Inn – the latter having recently re-iterated its own London-led growth strategy.
 
Tune Hotels doesn't cut corners in its beds, offering its guests upscale Hypnos beds in all its rooms - as good as many 4 and 5 star hotels

To achieve low property costs, Tune could have headed out of town – but central locations with good transport access are a cornerstone of the brand. 

That means its development team have to take a creative approach; Folgate Street, for instance, will refurbish an old office building.  Unusually, it will also have a small garden - an oasis in the City - so I'm looking forward to seeing how that turns out.

I remember when the pub group Wetherspoons got started, it broke the big chains' stranglehold on pubs by converting other buildings – cinemas, banks, even railway stations.  That strategy worked for them.

Having acquired the site, the design needs to divide up the building into rooms to get the maximum residents for the space – and also ensure that the maximum advantage can be taken of standardised design and components, to reduce the cost of fitting out.  Efficient use of space means no wastage on lobbies, hallways, or empty space, as well as designing rooms for maximum energy efficiency.

It's also important at this stage to think about how to ‘design out' running costs, for instance by making the rooms easier to clean – no carpet, for instance and wipe-clean finishes.  Doing that without looking ‘cheap and nasty' takes some finesse.
 
Staff at Tune Hotels are recruited for their friendly attitude and do not necessarily have a previous track record in the hotel industry

Designing hotel services for low staffing means using vending machines instead of room service, and maybe – as Tune Westminster has done – linking with a local coffee shop to offer breakfast. 

YOTEL has a similar approach – part of a growing breed of budget hotels which act like airlines.

It also means outsourcing the housekeeping services, rather than providing them in-house (that obviously wouldn't work at The Stafford, where the housekeeping team is crucial in providing personalised guest care – but then that's a very different business model).

When my blog colleague Rajul met the CEO of Tune Hotels a while back, he said that the quality of cleaning was one of the operational factors he personally gave most attention to when inspecting a hotel – since this is such a powerful brand differentiator for budget hotels.
 
Tune CEO Mark Lankester is passionate about offering guests a pleasant "no frills" experience, with clean rooms, comfy beds and friendly staff the uncompromising cornerstones

Tune Westminster manages to run nearly 80 rooms with seven full-time staff – a general manager, five guest relations personnel on various shifts and a maintenance manager. 

Guest relations staff are generally new to the hospitality trade – they're recruited for their friendly attitude and trained on the job, as our analysis of budget hotel recruitment confirmed.

Tune focuses on what really matters to its guests.  The beds are not cheap – because you're probably going to spend most of your time in the hotel asleep.  On the other hand, there's no room service, no restaurant, no gym and no TV or hairdryer unless you pay for it (as transparently set out in the hotel's price list – no hidden extras). 

There's no compromise on essentials, but anything that doesn't patently deliver value to 100% of customers is made into an optional add-on.  That helps keep the basic rate low.

All the extras are clearly listed during the Tune booking process: transparency is critical

Finally, you need to add efficient marketing.  A budget hotel can't afford a massive advertising budget, so it needs to use a little imagination in promoting itself. 

Tune opened its first hotel by promoting  "a room for a penny" to get the word out – and it certainly worked, getting a lot of good press and backing up the budget message.

It's probably equally easy to create a budget chain by just shaving corners on all costs, buying a shabby old terrace in Earls Court and never updating any of the rooms.  In fact, that would probably be a good deal easier.

Creating a cheap hotel from scratch in the way described above is difficult and time-consuming.  But as Julie Gould, who runs Tune's marketing, says: "People realise that low budget doesn't have to mean cheap and nasty."

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