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high demand for budget accommodations is pushing hotel operators to expand by building more low-cost facilities.

Publicly listed property developer PT Intiland Development plans to build 10 budget hotels this year while targeting to operate 60 low-cost hotels by 2016.

Intiland corporate secretary Theresia Rustandi said the company had seen an increased demand for budget hotels over the past few years.

“The increasing number of low-cost flights has boosted the demand for budget hotels. After spending their money on airplane tickets, people usually think twice about staying in a five-star hotel but also refuse to stay in a one-star hotel,” Theresia said as quoted by kontan.co.id.

“That’s why we’re focusing on building premium two-star hotels.”

Intiland plans to develop the budget hotels under the Whiz Hotel brand in Jakarta; Surabaya, East Java; Manado, North Sulawesi; and Pontianak, West Kalimantan.

Whiz Hotels in Bali and Balikpapan, East Kalimantan, are currently under construction.

Intiland already has one budget hotel in Yogyakarta offering rooms from Rp 280,000 (US$32.92) to Rp 450,000 per night, and is finishing one hotel in Semarang, which is expected to begin operation in November.

“The brand is the most important thing. We can offer franchise rights or joint venture cooperations to build the hotels,” Theresia said.

One budget hotel costs between Rp 40 billion and to Rp 50 billion to construct.

Meanwhile, Tune Hotels operator PT Tune Hotels Regional Services Indonesia said it would build five new hotels next year.

Tune Hotels Indonesia director Sendjadja Widjaja said that the company, which already has two hotels in Bali, planned to build more hotels in Jakarta, Bandung, West Java; Makassar, South Sulawesi; Palembang, South Sumatra; Surabaya and Yogyakarta.

Tune Hotels Indonesia has allocated $4 million to $5 million for each 120-to-150-room hotel.

Sendjaja said the occupancy rate for two-star hotels reached an average of 75 percent on weekdays.

“Now people prefer low-cost hotels so they can spend more money on other things,” he told kontan.co.id, pointing to the increasing numbers of domestic and international flights as another factor increasing demands for low-budget accommodations.

“People are now looking for convenience instead of expensive prices. Both students and their parents are staying in our hotels when they are in Bali. This way they can spend more money on shopping,” he said.

Tune Hotels prices their rooms at Rp 150,000 to Rp 160,000 per room per night.

Tune Hotels is part of the Tune Group, the private investment group of Tony Fernandes, founder and Group CEO of low-cost airline AirAsia. Tune Hotels is aiming for 100 hotels in its global portfolio by 2015. (swd)