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Jakarta Post

New hotels spark fear of price war, environmental problems

  • The Jakarta Post

    The Jakarta Post

  /   Wed, October 1, 2014   /  11:56 am

The rapid development of new hotels over the last few years has raised the prospect of unhealthy business competition in Semarang, Central Java, and environmental problems in the neighboring Yogyakarta province.

Secretary-general of the Indonesian Hotels and Restaurants Association (PHRI) Central Java branch, Yantie Yulianti, said that even though there was an oversupply of hotels in Semarang, the capital city of Central Java continued to issue licenses for new hotels.

'€œHotels will compete to win guests. A price war will surely erupt,'€ Yantie said recently.

She said four-star hotels would likely lower their room rates to attract guests.

'€œThree-star hotels will suffer the most,'€ she said.

Semarang is home to seven four-star hotels and four five-star ones. Yantie said that in spite of the city offering meeting, incentives, convention and exhibition (MICE) facilities, the hotel market in Semarang was actually stagnant. The development of new hotels would increase competition, she said.

Patra Jasa Semarang Convention Hotel'€™s general manager Harjono concurred, saying that rising competition was evident as new hotels emerged in Semarang.

He said his hotel was relying on government meetings held in the regions, including in Semarang.

'€œWe have always offered MICE packages to different government institutions and political parties,'€ Harjono said.

In Yogyakarta, environmental concerns have been raised amid the rising number of hotels in the province.

'€œEconomically, new hotels have had a strong impact, contributing Rp 1.7 trillion (US$139 million), which is very big. But, the environmental impacts are extremely serious,'€ researcher Ike Janita Dewi of Sanata Dharma University'€™s center for tourism development and training said.

Citing her latest research, Ike said that from 2012 until September 2014 there were 5,667 new hotel rooms in Yogyakarta, resulting in an increase of hotels rooms from 10,054 in 2011 to 15,731 this year.

Supply and demand is expected to reach a balance in 2019, but by then, the city might have already suffered from the environmental impacts of new hotel development.

She said that new hotels established in residential areas threatened the clean water supply for nearby residents. Poor environment management and control as well as limited green spaces and parking areas would exacerbate the problem.

Big hotels erected on small streets, she said, would lead to traffic congestion that would worsen during holiday seasons.

Ike also said the uncontrolled development of new hotels in Yogyakarta could disturb tourists. '€œThis is very dangerous because other infrastructure cannot support the speed of new hotel development,'€ Ike said.

Meanwhile, Yogyakarta Municipal Licensing Agency'€™s regulation division head, Gatot Sudarman, said that the city administration had stopped accepting proposals for new hotel development in late 2013.

However, prior to that, Gatot said, his agency had received 117 proposals for new hotel development and had since issued licenses for 83 of them.

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