Djarum wins bid to manage Hotel Indonesia

Djarum wins bid to manage Hotel Indonesia

Rendi A. Witular, The Jakarta Post, Jakarta

Indonesia's third largest cigarette company, PT Djarum, appears
to have won a government contract to manage the legendary, state-
owned Hotel Indonesia and Hotel Wisata in Central Jakarta for the
next 30 years.

Djarum is now the only contender after eight other bidders,
including electronics producer PT Maspion Indonesia, withdrew at
the last minute because they could or would not commit to
spending around US$250 million to upgrade the rundown, loss-
making hotels.

Djarum and the government must agree on the profit-sharing
ratio before any contract is signed.

Office of State Minister of State Enterprises logistics and
tourism deputy head Ferdinand Nainggolan said Monday that Djarum
had agreed to initially spend around Rp 1.7 trillion ($204
million) upgrading the hotels under the build and take over (BOT)
scheme.

He said that under the scheme, Djarum would renovate and
manage the two hotels for 30 years before returning them to the
government.

Ferdinand said the government wanted around 70 percent of the
profits.

"We are still negotiating the revenue sharing scheme and we
expect that by the end of this year the contract can be signed,"
he said.

The five-star Hotel Indonesia has struggled to compete with
more upmarket competition, including the neighboring Hotel Grand
Hyatt.

Last year, Hotel Indonesia booked a Rp 3 billion loss.

Under the proposal submitted to the ministry, Djarum also
plans to spend additional money building a new shopping mall that
would connect Hotel Indonesia and Hotel Wisata.