Djarum will manage Hotel Indonesia, Inna Wisata

Djarum will manage Hotel Indonesia, Inna Wisata

The Jakarta Post, Jakarta

After months of protracted negotiations with the government,
the country's third largest cigarette maker PT Djarum has been
named the new operator of state-owned Hotel Indonesia and
adjacent Hotel Inna Wisata.

A press statement issued by Hotel Indonesia said that Djarum's
property subsidiary PT Cipta Karya Bumi Indah (CKBI) will manage
the two hotels, both located in the prime area of Central
Jakarta, under a 30-year build, operate, and transfer scheme with
the government.

The statement said that Djarum planned to invest around Rp 1.3
trillion (US$146.11 million), some Rp 230 billion of which is to
be used to finance the renovation of the legendary five-star
Hotel Indonesia, and more than Rp 1 trillion to a develop
shopping mall, connecting the two hotels.

Under the deal, Djarum will get 51 percent of the profit from
the two hotels, while the remainder to go to PT Hotel Indonesia
Natour, a state-owned company that owns the two hotels.

Djarum had previously insisted on an 80:20 percent profit
sharing mechanism.

Djarum outbid eight other investors late last year for the
contract to operate the two hotels. Electronics maker PT Maspion
Indonesia, withdrew its bid at the last minute as they could not
commit to spending some $150 million to upgrade the rundown
unprofitable Hotel Indonesia.

Last year, Hotel Indonesia booked Rp 3 billion in losses. The
hotel has struggled to compete with the more upmarket
competition, including the neighboring Grand Hyatt Hotel, Nikko
Hotel and Mandarin Oriental Hotel.