Hospitality Industry Performance Pressured by Budget Efficiency Measures

The Indonesian Hotel General Manager Association (IHGMA) has called on the government to evaluate its budget efficiency policies, as they have significantly impacted the national decline in hotel occupancy. This was stated by the Chair of the IHGMA National Conference Organising Committee, Fahrurrazi.

“We hope that government policies can support the hospitality industry,” said Fahrurrazi, as quoted from Antara on Friday, 17 April 2026. IHGMA noted that government spending efficiency measures implemented over the past year have caused a 27 to 30 percent drop in hospitality business nationally.

So far, according to him, the hospitality sector remains heavily reliant on government activities, such as organising meetings, gatherings, 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 measures to sustain operations.

“The hospitality industry is always dynamic with existing conditions. We are doing various things to reduce costs and expenses,” he said. Furthermore, Fahrurrazi mentioned that the hospitality industry makes a significant contribution to state and regional revenues through hotel taxes.

Hotel taxes rank second or third as contributors to regional own-source revenue. Nationally, they are in fourth or fifth place after the oil and gas sector. “We strongly urge the government to re-evaluate these policies (budget efficiency),” said Fahrurrazi.

Based on data from the Central Statistics Agency (BPS) for February 2026, the occupancy rate of starred hotel rooms 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 in starred 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 circulation.

IHGMA General Chair 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.

A missile attack on Abu Dhabi Airport in early March caused disruptions to many international flights, which also affected Indonesia’s hospitality industry. “The most impacted area is Bali, because the international scale is there,” said Arimbawa.