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Jakarta Post

New players enter fast- growing hotel industry

New upscale and budget hotels are growing like mushrooms in Indonesia as many new players enter the hospitality industry to take advantage of the increase in business activities and tourism in the country

Nurfika Osman (The Jakarta Post)
Jakarta
Mon, March 18, 2013

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New players enter fast- growing hotel industry

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ew upscale and budget hotels are growing like mushrooms in Indonesia as many new players enter the hospitality industry to take advantage of the increase in business activities and tourism in the country.

According to the Indonesian Hotel and Restaurant Association (PHRI), there will be at least 45,000 new hotel rooms this year, an increase of 30,000 from 15,000 rooms in 2012. The increase is far higher than the additional 5,000 to 15,000 rooms a year during the past several years.

The new supply would increase the total number of hotel rooms to around 285,000 nationwide by the end of 2013, the association said.  

In Jakarta alone, at least 36 upscale and budget hotels will start operations this year, providing an additional supply of almost 3,000 new rooms, according to data provided by property consultant Colliers International.

The data shows that up to 40 percent of the new properties comprise budget hotels under Amaris, Favehotel, Ibis Budget, POP! Hotel, Tune and Whiz brands, located in prime areas such as Kebayoran Baru, Kemang, Menteng, Setiabudi and Thamrin.

PHRI executive director Cyprianus Aoer attributed the sharp increase in the number of new rooms to the increase in budget hotels outside Jakarta.

At present, the construction of new hotels was not only dominated by established hotel chains, as many companies from outside the hospitality industry had entered the hotel business to take advantage of growing economic activities and tourism, he said.

Based on Central Statistics Agency (BPS) data, the number of foreign tourists increased by around 10 percent over the past two years. The BPS recorded 8.04 million and 7.65 million foreign tourist arrivals in 2012 and 2011, respectively.

For domestic travelers, the agency’s data showed that there were 247 million and 235 million domestic trips in 2012 and 2011, respectively.

“A lot of new players have begun to enter the hotel business because they see promising opportunities in this business sector,” Cyprianus said.

The new players in the hotel business include the country’s largest travel and tour company, Panorama, Bandung-based transportation company Cipaganti, and state-run firms like Angkasa Pura (AP) I, Angkasa Pura II, Pos Indonesia and Sarinah.

Panorama Hospitality Management’s (PHM) managing director, Kristian Kuntadi, said that the firm planned to open 10 new hotels, ranging from budget to four-star classification, by 2014 in major cities across Java and Bali.

Similar to the PHM, Cipaganti Inti Development (CID) plans to build 10 properties in the hospitality and apartment sector by 2020.  

CID president director Robertus Setiawan said that the firm would build midscale hotels, resorts, bungalows and condotels mostly in popular tourist spots like Pangandaran Beach and Bandung, West Java, and Bali.

“We are focusing our hospitality business in these areas because they are potential markets for both domestic and foreign travelers. The hotels are going to be managed by our own Cipaganti Hospitality Management,” Robertus said.    

Airport operator for the eastern part of Indonesia, AP I, also commenced construction of its first hotel at Juanda International Airport in Surabaya, East Java, last month.

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