Established hotel chains are turning their attention to small cities in Java or islands beyond Java and Bali, such as Kalimantan and Sumatra, to expand their businesses.

Norbert Vas, vice president for sales and marketing at Archipelago International, previously known as Aston International, said many hotel chains were looking toward small cities or areas outside Java as there were signs of market saturation in major cities in Java and Bali.

“Right now, we have no plan to open new hotels in Yogyakarta, Surakarta, Semarang or even Bali, unless they are located in prime areas,” Nobert said.

Guido Andriano, sales and marketing manager for Santika Indonesia Hotels and Resorts, shared Norbert’s observation, saying that hotels in Java and Bali’s main cities were overcrowded.

“Small cities such as Pekalongan [Central Java], Purwakarta and Tasikmalaya [West Java] are more promising, as governmental and business activities are growing,” Guido said, adding that the infrastructure in these cities was also
being improved.

He said that Santika planned to open 22 new hotels this year, offering a total of 2,366 rooms, ranging from its budget class under the Amaris brand to the upmarket Santika Premiere chain across the archipelago, in areas that included three regional cities and Jakarta suburbs Cikarang and Bekasi.

Tauzia Hotel Management said it also had plans to expand its business in smaller cities in Java, such as Malang, and cities outside Java and Bali.

 “Sumatra, Kalimantan and Sulawesi offer greater opportunities to grow. We are planning developments from our budget hotels to our upmarket brands in these areas,” Tauzia spokeswoman Yani Sinulingga said.

She said the firm’s budget brand POP! Hotel and mid-scale Harris Hotel would, for example, open new hotels in Balikpapan, East Kalimantan; Kendari, Southeast Sulawesi; and Palembang, South Sumatra.

Despite signs of market saturation, consultant Colliers International sees major cities in Java and Bali as still promising for luxury hotels. Jakarta, for example, is due to welcome a new Fairmont Hotel and Regatta Hotel in 2014.

In addition, the international Accor chain will be introducing its Sofitel brand to Nusa Dua in Bali in September this year. The 415-room hotel has been chosen as the venue for the Asia-Pacific Economic Cooperation (APEC) Summit.

Indonesian Tourist Industry Association (GIPI) chairman Didien Junaedy said the government should increase air transportation services to new tourist destinations in order to attract more hotel operators.

New destinations, such as those included in the National Tourism Strategic Locations (KSPN) scheme like Rinjani in Lombok; Flores; Wakatobi in Southeast Sulawesi; Toraja in South Sulawesi; and the Derawan islands in East Kalimantan, were interesting places, he said. But due to the lack of accommodation facilities, not many people were likely to visit them, he added.

 “They are beautiful destinations, yet accessibility remains the biggest problem for them to grow as new attractions. If transportation is good, the hospitality industry will flourish and the multiplier effects will be enjoyed by the local people,” Didien said.

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