Hospitality Industry Hit by Government Efficiency Measures, IHGMA: We Urgently Request Evaluation of That Policy

The government’s budget efficiency policies have impacted various industrial sectors, including the hospitality industry, whose business operations rely heavily on government activities. In response, the Indonesian Hotel General Manager Association (IHGMA) has called on the government to evaluate these budget efficiency policies, as they have significantly contributed to a national decline in hotel occupancy. “We hope that government policies can support the hospitality industry,” said IHGMA National Conference Organising Committee Chairman Fahrurrazi during a press conference at the Merumatta Hotel in West Lombok, West Nusa Tenggara, quoted on Friday, 17 April 2026. IHGMA notes that the government’s spending efficiency measures over the past year have caused a 27 to 30 percent drop in hospitality business nationally. According to him, the hospitality sector has long depended on government activities, such as organising meetings, conferences, and other official events. When such spending is curtailed through budget efficiency, demand for hotel rooms also decreases. Fahrurrazi stated that the hospitality industry is not standing idle in the face of this situation. Business operators continue to take various adaptive steps to sustain their operations. “The hospitality industry is always dynamic with existing conditions. We are doing various things to reduce costs and expenses,” he said. Furthermore, Fahrurrazi conveyed that the hospitality industry makes a significant contribution to national and regional revenues through hotel taxes. Hotel taxes rank second or third as contributors to local original revenues. Nationally, they are in fourth or fifth place after the oil and gas sector. “We urgently request that the government reevaluate these policies (budget efficiency),” said Fahrurrazi. Based on data from the Central Statistics Agency (BPS) for February 2026, the occupancy rate of star-rated hotels in Indonesia was 44.89 percent. This figure is lower compared to January 2026 data, which reached 47.53 percent. The average length of stay for foreign and domestic guests at star-rated hotels in Indonesia was only 1.64 days in February 2026 and 1.59 days in January 2026. The short duration of stays results in limited economic turnover. IHGMA General Chairman I Gede Arya Pering Arimbawa added that the declining hotel occupancy is not only driven by domestic conditions but also by geopolitical tensions in the Middle East.