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Mixed outlook in hospitality industry
The hospitality industry looks promising in some regions while it is going through a slowdown in some other areas
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Amaris Hotel Pancoran located at Jalan Raya Pasar Minggu, South Jakarta. (JP/Nurhayati) (JP/Nurhayati)
The hospitality industry looks promising in some regions while it is going through a slowdown in some other areas.
Indonesia's hospitality industry still looks good for some developers. This can be seen from the decision of hotel chains to open new hotels in certain regions of the country starting this year.
International hotel chain Accor, for example, plans to open a number of hotels in Indonesia by the end of this year. The chain's newest hotel, which will commence operations this year, is the ibis Harmoni hotel in Jakarta.
'ibis Harmoni is now in its soft opening phase. We plan to open new hotels in Jakarta, Bandung Makassar and Surabaya in the fourth quarter of this year,' Accor Indonesia public relations and communications staff member Herna Lesmana was quoted by kompas.com as saying.
According to Herna, Accor will open Pullman and ibis hotels in Bandung. The two hotels are currently under construction.
'We also plan to open a hotel in Kalimantan in the years to come. The same goes for our plan [to open a hotel] in Bali,' she said.
The group also recently sealed an agreement with national property developer PT Intiland Development to build hotel facilities at Intiland superblock project Praxis in Surabaya.
Intiland vice president and chief operating officer Sinarto Dharmawan and Accor Asia-Pacific Gerard Guillouet signed a memorandum of understanding (MoU) on the partnership on May 25 at Intiland Tower in Surabaya.
Similar to Accor, Swiss-Belhotel International also plans further expansion by 2020, capitalizing on business travelers.
'There are 45 hotels and other projects that we plan to commence in Indonesia in the next two years, along with more than 20 globally operated hotels within the same period,' said Swiss-Belhotel International chairman and president Gavin M. Faull.
Currently, the chain operates 44 hotels nationwide, comprising 10 different brands, including the Zest hotel, which targets budget travelers as their main market segment. The brand was launched in Indonesia at the beginning of 2015, with the most recently opened hotel being the Zest Hotel Bogor last March.
Faull said he was optimistic that Indonesia's tourist industry would grow rapidly, mainly thanks to the emergence of the middle class and budget travelers, which could be seen from the expansion of low-cost carriers.
'As a global brand, we also want to work on growing markets. This socioeconomic class is our focus,' he said.
Some challenges
The current picture of Indonesia's hospitality industry, however, is not all rosy. There are some challenges that need to be addressed.
The hotel industry has been challenged by the recent oversupply in Jakarta and Bali where the industry's rapid growth is not followed by sufficient demand. Unfortunately, demand for hotels has declined due to the economic slowdown.
Furthermore, during the first quarter of this year, the hotel business was impacted by the government's regulation prohibiting of civil servants from conducting meetings or seminars in hotels.
Some hotels in Malang, East Java, have also been impacted by the regulation, with average occupancy rates having dropped to around 30 to 50 percent from the previous 60 percent. Aside from the new regulation, a paucity of interesting events in Malang that could attract tourists is also the cause of the occupancy rate decline.
The average occupancy rate of the Atria hotel, for instance, has dropped to 50 percent this year due to the abovementioned two factors. In order to cope with the declining demand, the hotel had to layoff 25 percent of its staff members.
The Pelangi hotel, which is also located in Malang, has also seen an average occupancy rate decline, with a drop of 30 percent this year. The hotel has also coped with the decline by laying off employees.
The Indonesia Hotel and Restaurant Association's Malang chapter head Herman Soemarjono explained that the average occupancy rate of hotels in Malang had dropped to 40 percent recently, from 60 percent last year. To maintain healthy competition among hotels in the city, he suggested that no new hotels be developed there.
'The hotel business in Malang is saturated,' he said. There are 73 hotels in Malang, ranging from low-budget to five-star hotels. Meanwhile, 20 new hotels have been erected in the last two years in the city.
However, this is not always the case. On some occasions, like the recent mid-year school holiday, hotels in the Batu area, which is still in the vicinity of Malang, enjoyed a high occupancy rate of 80 percent.
Tourists visiting Batu during the current school holiday mostly hail from other parts of Java or Bali. Batu is surely an asset to Malang's tourism, as it is rising in popularity for its tourist attractions, including Jatim Park Zoo and Batu Night Spectacular, among others. (JP)
