Hilton quits Indonesia after prolonged dispute

Hilton quits Indonesia after prolonged dispute

JAKARTA (JP): Hilton International has withdrawn all its
services from all its hotels in Indonesia following a prolonged
dispute with the hotels' owner here over payment, the hotel
chain's top executive confirmed on Friday.

President of Hilton's Asia Pacific division Koos Klein said
the withdrawal affected five hotels including the Jakarta Hilton
International, Lagoon Tower Jakarta Hilton International, the
Hilton Residence, Patra Surabaya Hilton International and Bali
Hilton International.

The five hotels are all owned by local hotelier PT
Indobuildco, a company controlled by businessman Pontjo Sutowo
and his family.

Klein said the five hotels may continue to carry the Hilton
name until the dispute was settled. However, Hilton would not be
responsible for the level of service guests at the five hotels
would receive and would decline all liability and responsibility
in relation to the hotels and their guests until the dispute was
resolved, he said.

He said that the dispute emerged after the hotel owners failed
to pay Hilton International and group companies for the global
sales, marketing and distribution services provided to the
hotels.

"We hope it (the withdrawal) is only temporary. We'll be happy
to restart the management services as soon as the dispute is
settled properly," he told The Jakarta Post by phone from his
Singapore office.

He said Hilton International has been trying to settle the
dispute with Indobuildco but has not found a constructive
solution so far.

Klein said Hilton International had held direct management
control over the five hotels for a long period until in 1996 it
and Pontjo's Indobuildco formed a joint venture company, PT
Kelola Santana, to take care of the management and daily
operation of the hotels.

Klein said Hilton also has a separate dispute with its
counterpart with regard to their joint venture company.

Under the agreement, Hilton and its counterpart jointly
appointed the chief executive to their joint venture company, he
said.

"But our local partner has recently withdrawn its support for
the chief executive, causing the person to leave the country
because his working permit could not be extended without the
support of our local partner.

"Now we have no chief executive to handle the company and that
certainly affects our hotel's services," he said.

Klein said Hilton would continue to work toward a resolution
of the situation.

Pontjo was not available for comment but Jakarta Hilton's
public relations manager, Dewi Widiyanti, confirmed Hilton's
withdrawal.

She said that sales, marketing and distribution services for
the five Hilton hotels here were now handled directly by
Indobuildco.

However, she declined to comment on the fee dispute between
Hilton and Indobuildco.

"That's between Hilton and the hotel's owner company. You'd
better talk to Pak Pontjo, but he's currently out of town until
Monday next week," she told the Post.

As an impact of the withdrawal, the five hotels were no longer
linked with the other Hilton properties worldwide and
reservations should now be made directly to each of the five
hotels here, she said. (cst)