Bumi Modern reports rise in losses

JAKARTA (JP): PT Bumi Modern, the owner of the Hyatt Regency Surabaya, a four-star hotel in the East Javanese capital, yesterday reported total losses of Rp 24.8 billion (US$10.5 million) last year.

The losses indicated a 119 percent increase from the Rp 11.3 billion deficit in 1994.

"The poor performance was due mainly to the over-supply of rooms after the opening of new hotels in Surabaya and its surrounding areas," Bumi Modern's president, Sri Hoedojo Sontokusumo claimed.

Speaking after an annual shareholders meeting yesterday, Hoedojo's main concern was the limited volume of the upper market as the number four and five-star class hotel rooms in Surabaya has increased from 438 in 1993 to 2,696 this year.

He said only three four-star hotels operated in Surabaya in 1993; the Hyatt Regency (with 268 rooms), Majapahit Mandarin (50 rooms) and Garden Palace (120).

"But last year, three new hotels with international marketing chains -- Shangri-La, Radisson and Novotell -- opened," he said. "And this year, Sheraton, Westin and Grand Mercure begin their operations.

"It was a fact that room supply in Surabaya have exceeded the demand and I simply cannot understand why investors are still allowed to open new hotels in East Java," he added.

Hoedojo denied the notion that the Hyatt Regency had failed to compete with other new hotels, particularly the Shangri-La.

He claimed that the over-supply situation, which has been affecting other hotels as well, has forced the Hyatt to lower its room rates.

Another consequence is that Hyatt Regency has been unable to service and repay its long term debts totaling $29 million and another debt to its founders amounting to $26 million.

The company's total deficit in 1995 exceeded Rp 31 billion. Its losses per share also increased from Rp 256 in 1994 to Rp 553 last year.

Hoedojo said that the company might also fail to make a profit this year as there is still no sign of any upward trend in the market, resulting in its possible delisting from the Jakarta Stock Exchange. (08)