INDONESIA is fertile ground for hotel investment, but pushing rates up will remain a challenge for investors and hotel operators.
Speaking at the Second Annual Indonesia Hotel Investment Conference in Bali last Friday, Yanti Sukamdani, chairman of Indonesia Hotel and Restaurant Association shared that within the hotel investment space, Indonesia will welcome 288 new hotels by 2016 including 17 projects in Jakarta, 12 in Bogor, 12 in Jogjakarta, 15 in Cirebon, 19 in Surabaya, 15 in Makassar, and 67 in Bali.
She urged hoteliers and industry stakeholders to consider the challenges that continue to plague the industry. “When we build more hotels, we need more water, electricity, food and beverage, (things that the tourism stakeholders) need to consider about.”
She pointed out obstacles such as increasing land costs, not only in Bali but other Indonesian major destinations as well.
“Hotel rates in Indonesia remain low compared to other countries and this adds to the challenge both investors and hotel operators are facing,” she said.
The average room rate of four- and five-star hotels in Indonesia is about US$100 with RevPAR of US$70, while one- to three-star hotel rates stand at US$50 with RevPAR of US$38.
“While the tourism authority, the Indonesia Tourism Promotion Board (of which Yanti is chairman) and the tourism industry need to work harder to improve the product and services of our hotels, it is important for investors to calculate well the pay-back period,” Yanti said.
Nevertheless, the country’s tourism sector is doing well according to statistics from the Ministry of Tourism and Creative Economy.
Yanti said: “Tourist arrivals to the country up to April showed a (10.6 per cent) increase from 2.7 million in 2013 to 2.9 million.”
Domestic tourism is also rising. “The number of movements during this period was 55.9 million and the target for the whole year this year is 255 million,” she added.
Tourism receipts grew 6.9 per cent in 1Q2014, outstripping national GDP growth of 5.2 per cent, while investment in tourism during the same period soared 256.4 per cent from US$36.5 million to US$130.1 million.
