TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Makassar hoteliers struggle to regain pace
The hotel industry in the South Sulawesi provincial capital of Makassar, the largest city in eastern Indonesia, has begun to enjoy a slow recovery after being hit hard by the central government’s decision to prohibit civil servants from organizing meetings at hotels
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
T
he hotel industry in the South Sulawesi provincial capital of Makassar, the largest city in eastern Indonesia, has begun to enjoy a slow recovery after being hit hard by the central government’s decision to prohibit civil servants from organizing meetings at hotels.
According to data from the Indonesian Hotel and Restaurant Association’s (PHRI) South Sulawesi office, the average hotel occupancy rate in Makassar hotels fell to 53 percent in 2015 from nearly 70 percent the previous year, following the introduction of the prohibition in late 2014 to cut state spending.
Last year, the rate increased slightly to 58 percent on the back of an increasing number of tourist arrivals.
“For 2017, we estimate that the growth in hotel occupancy rates will be stagnant. It is really difficult to reach the 60-percent level again,” PHRI South Sulawesi head Anggiat Sinaga told The Jakarta Post over the weekend.
In 2013, the hotel occupancy rate in Makassar stood at 73 percent.
Anggiat hoped that the local government would intensify tourism promotion to attract more tourists to the city, whose iconic spots include the famous Losari Beach and the centuries-old Fort Rotterdam.
Another factor that has suppressed the hotel occupancy rates is oversupply, the association pointed out. The number of hotel rooms in Makassar grew by 12 percent year-on-year to 13,350 in 2016. Although the rate slowed compared to the 35-percent growth in 2015, it was still in the double-digit range.
The oversupply has caused profit margins to drop by between 15 percent and 20 percent in the last three years as a result of a price war, Anggiat said.
“Many hotels have seen ownership change. Not that long ago, a hotel owner desperately put for sale advertisements in local newspapers, something we actually consider to be taboo,” he said.
However, despite the tight war between hotels, Makassar’s bustling economy has attracted new players to come to fight for a slice of the pie. Global hotel giant AccorHotels, for example, recently opened its fourth hotel in the city, the Ibis Styles Makassar Sam Ratulangi.
“The economy is a bit shaky but we saw an opportunity to expand,” AccorHotels Malaysia-Indonesia-Singapore chief operating officer Garth Simmons said, adding that his Makassar hotels had seen 15 to 20 percent higher occupancy rates than the market’s average.
The Makassar economy grew at 7.41 percent year-on-year in 2016, with regional gross domestic product (PRDB) per capita reaching Rp 44.6 million (US$3,348.68). As 51 percent of the Sulawesi economy is in South Sulawesi province, the city has become one of the main business destinations.
“The city is growing rapidly, of course we need more high quality hotels for business travelers. The competition has become tighter so we hope the hotels can increase their level of service,” deputy South Sulawesi governor Agus Arifin Nu’Mang said.
Other than business travelers, the regional government is also aiming for more casual travelers by holding more cultural events. The Makassar municipal administration currently holds around 20 events a year, while the South Sulawesi provincial government has three major events, namely the Celebes Travel Mart, Lovely Toraja and Takabonerate Island Expedition.
