Govt to issue regulation on hotel chains

Govt to issue regulation on hotel chains

JAKARTA (JP): The government will soon issue a regulation
requiring foreign hotel chains to set up Indonesian-incorporated
companies before establishing or managing hotels in the country,
Director General of Tourism Andi Mappi Sammeng said.

Speaking at the opening of the Novotel Benoa Bali hotel in
Bali on Monday, Andi said the planned regulation aimed to reduce
the flow of foreign currency out of Indonesia. Currently, large
amounts of money go to pay royalties and other payments to
foreign hotel chains.

"Hotels managed by international chains have to pay high
payments to the chains' headquarters abroad, thereby increasing
the country's deficit in its current accounts," he was quoted by
Antara as saying.

Almost two years ago, Minister of Tourism, Post and
Telecommunication Joop Ave promised the issuance of the ruling
but Andi did not disclose why the regulation's preparation had
taken so long.

Andi said international chain-managed hotels were too
dependent on their foreign headquarters, making it difficult for
the government to control their management.

"Whenever they are asked to follow local regulations, the
managements of such hotels always excuse themselves, saying they
have no rights to make decisions," he said.

Under the planned regulation, all hotels operating in
Indonesia must establish companies incorporated in Indonesia, so
their top management in Indonesia have the power to make
decisions even though they cooperate with foreign chains, he
said.

Andi said some hotels had established Indonesian-incorporated
firms, such as the Hilton International Indonesia Hotel and the
newly-dedicated Novotel Benoa Bali Hotel.

In Novotel Benoa Bali Hotel's case, the hotel is managed by
Accor Asia Pacific (AAPC). The hotel's owner, the Jakarta-based
PT Kaestindo, has invested about US$25 million in its
establishment. (jsk)