Djarum to invest in hotels

Djarum to invest in hotels

Ferdinand Nainggolan, a deputy at the Office of State Minister
of State Enterprises, said that the government was considering a
proposal from PT Djarum, Indonesia's second largest cigarette
producer, to jointly manage two ailing state-owned hotels: Hotel
Indonesia and Hotel Wisata.

He said that Djarum had submitted a proposal to inject around
Rp 1.7 trillion (US$202 million) with a request in return of
managing the hotels for 30 years.

In the proposal Djarum also asked a permission to build a new
shopping mall that would connect the two hotels, he said.

However, Ferdinand explained that currently the ministry was
still seeking the best cooperation scheme with Djarum. The best
options would either be in a revenue-sharing operation or
privatization scheme.

The government owns 100 percent stake in the two hotels.

Ferdinand said that the five-star Hotel Indonesia last year
booked a loss of Rp 3 billion.

In order to revive the hotel's competitiveness, the government
needed around $250 million to renovate its shabby appearances.

"Hotel Indonesia doesn't look like a five-star hotel. It has
difficulty to compete with its nearby competitor such as Hotel
Grand Hyatt and Hotel Nikko. To attract more guests we need to
rejuvenate the entire hotel," he said. -- JP