P

ublicly listed developer PT Surya Semesta Internusa (SSIA), the owner of Gran Melia hotels, plans to invest in low-cost “business” hotels to increase revenue.

SSIA president director Johannes Suriadjaja said within five years, the company aimed to have 4,000 rooms in 35 budget hotels across the country. “One hotel will have 100 to 125 rooms. Each room will need an investment of about Rp 250 million [US$26,343.50],” he said.

This means the company would invest at least Rp 1 trillion in the hotels.

SSIA has just begun the construction of five hotels in five cities: Jakarta, Palembang in South Sumatra, Pekanbaru in Riau, Karawang in West Java and Surabaya in East Java.

“We are expecting the hotels to be ready next year. We are also waiting for permission to develop budget hotels in Yogyakarta and Makassar,” Johannes said, declining to reveal the name of the hotels.

The five hotels will need an investment totaling around Rp 350 billion, he went on. “We will finance this from our internal cash and bank loans at about 50:50 in composition,” Johannes said.

Johannes said that SSIA had opened bids to sell one of its hotels, The Plaza Hotel Glodok, located in West Jakarta.

He said the funds from the sale, valued at around Rp 300 billion, would be used to finance future developments of budget hotels.

Property developers are trying to enter the low-cost hotel market, which has been growing in line with the country’s tourism and economic growth.

To compete with other developers, Johannes said SSIA would develop a slightly higher level of budget hotels. SSIA’s hotels would be promoted as low-cost business hotels, which provide meeting rooms and accommodate other business arrangements. “While other budget hotels are targeting individual travelers, we are seeing customers from corporations. We will try to establish agreements with corporations to use our hotels for their appointments,” Johannes said.

SSIA, through its 53.75 percent owned subsidiary PT Suryalaya Anindita International, owns two five-star hotels: Gran Melia Jakarta, which has 407 rooms, and Melia Bali Indonesia, which has 494 rooms.

SSIA is 66.22 percent publicly-owned. The other shareholders are PT Union Sampoerna (12.12 percent), PT Arman Investments Utama (8.35 percent), PT Persada Capital Investama (7.68 percent) and HSBC Private Bank (Suisse) SA Singapore.