Business as usual for non-star accommodation

Sudibyo S. Wiradji, Contributor, Jakarta

While the lull in the number of foreign tourists has significantly affected hotel bookings in most of the country's three to five-star hotels over the past several years, lower star accommodation has managed to maintain a monthly occupancy rate of up to 70 percent.

Unlike most high star hotels that generate revenue mainly from overseas travelers, many of the non-star, or those classified as one or two star hotels, with some exceptions, concentrate their marketing on domestic customers who pay in rupiah.

Consequently, the declining number of overseas tourists has no serious effect on their business. "We can do business as usual. Not a single employee has been laid off," Setiabudi Palace Hotel's Marketing Executive Wiarti Sumadi said.

Regular customers of this type of hotel include business and sales people, traders, students and ordinary guests. The hotels set reasonable and competitive room rates based on the purchasing power of the targeted market, ranging from Rp 100,000 (approx. US$9) to Rp 350,000 per night, compared to between Rp 550,000 and Rp3.5 million per night at a four or five star hotel.

Non-star hotels, commonly classified into 'Melati' type hotels, and low star hotels have a limited number of rooms, ranging from 25 to 150, with standard facilities such as individual air conditioning, a television set, bath room and shower with hot/cold water and telephone with International Direct Dial (IDD).

Except for particular two star hotels like Hotel Karya Bahana in Jakarta on Jl. Jaksa, a popular place with overseas travelers, that provides a coffee shop and a bar, many of the hotels in this category do not have such facilities or a sophisticated gymnasium, fitness center, spa, sauna facility or swimming pool like those found in almost all four or five star hotels. But hotels of this type do boast comfort, security and a cozy atmosphere.

With domestic customers as their target market, the use of the Internet as a marketing or promotional tool is not an urgent matter for many of the small hotels. To market their property, they rely on conventional marketing techniques such as leaflets, banners and fax machines.

"At present setting up a homepage for our company profile is not an urgent matter. Maybe it will become urgent in a few years," a spokesperson from Menteng Hotel I said, adding that e- mail was used only when the hotel wanted to communicate with a customer company outside the capital.

Certain low star hotels are always fully booked on Fridays through Sundays and several of them have guests for short-term stays.

Hotel Melawai located near Blok M shopping complex is one of the favorites in town.

The one star Setiabudi Palace Hotel has a monthly occupancy rate of 70 percent. It manages to maintain a high occupancy rate thanks to its good relations with corporate clients throughout the country. "We offer a 20 percent discount for our regular customers," she said.

She said that its regular customers were business people from various industries, including pharmaceuticals, insurance and banking. With most of its guests business travelers, Setiabudi Palace Hotel sees its rooms occupied on official working days from Monday to Friday. "However, on Saturdays and other holidays, our hotel is quiet," she said.

As providing lodging for business people from outside Jakarta is the hotel's primary objective, it does not provide sporting or leisure facilities such as a sophisticated gymnasium, bar, pub, massage spa or sauna, commonly available at high star hotels.

One of the older hotels in town, the two-star Hotel Metropole, also sees offering special rates for its regular customers as an effective means of retaining its monthly occupancy rate of over 50 percent even in times of crisis. Its regular customers include business people and students who come in groups. "We can guarantee that on school holidays, in July and on Idul Fitri, Christmas and New Year, our hotel occupancy rate will reach nearly 90 percent, with groups of students lodging in the hotel," said the hotel's Marketing Executive Sulaiman Mode.

The hotel offers competitive room rates of between Rp 100,000 and Rp 180,000.

The hotel is situated in Glodok shopping complex, in the Kota Chinese downtown area, just a few minutes away from the Mangga Dua shopping complex. The location makes it one of the more popular hotels for traders wishing to shop for electronics items in the capital.

"The hotel's location also helps students staying at the hotel to strike out on their own, and excursions to every part of Jakarta begin here," Sulaiman said, adding that from the hotel, the students often visited places of interest nearby, including the Museum of Jakarta History in North Jakarta, Ancol Dreamland in North Jakarta and the National Museum in Central Jakarta.

With domestic customers as its main market, the sharp drop in the number of foreign visitors to Indonesia, particularly Jakarta, has had no serious impact on the hotel. "Whether there is a crisis or not, one or two foreigners are seen booking a room in our hotel," he said.

As the hotel does not provide entertainment facilities, customers wishing to experience the night life in the capital have to search for entertainment outside the hotel, he added.

For government-linked hotels like Sri Wijaya Hotel on Jl. Veteran, finding potential occupants is not a problem as its regular customers are those from government offices. The 100-room hotel boasts an 80 percent occupancy rate. The room rates range from Rp 160,000 to Rp 350,000. The hotel is a favorite with government officials seeking accommodation in the capital because it is located close to government buildings, including the Presidential Palace, the Ministry for Home Affairs, and the headquarters of state-owned oil and gas company Pertamina.

For several hotels, floods which recently hit the capital proved to be a boon, as rooms were fully booked. The Setiabudi Palace Hotel, for example, was overwhelmed by those seeking shelter from the floods. "Our 41 rooms were all occupied for several days. This helped us to meet our sales target. This was a blessing in disguise," she said.

"Our hotel was also fully booked during the flooding and many flood victims failed to find a room in the hotel," said a spokesperson for Hotel Metropole.