Hotel industry sees better growth for 2000

JAKARTA (JP): Jakarta's hotel industry is projected to see a between five percent and 10 percent growth in room occupancy rates this year due to increasing business activity, an analyst said earlier this week.

Djodi Trisusanto, the associate corporate advisor for hotel property consultant PT Procon Konsulindo/Jones Lang LaSalle Hotels, said signs of business recovery were expected in February, with more foreign visitors arriving in the city to resume delayed business agendas.

He said the new government under the leadership of President Abdurrahman Wahid had, relatively speaking, been able to induce foreign trust in the country.

"As the sense of certainty is slowly reinstated, the foreign business community, which had delayed their activities due to the country's uncertain political developments in 1998 and 1999, are expected to return to Jakarta in February after the holiday season to resume activities or start feasibility studies on possible new business here," he told The Jakarta Post.

He said a significant return of business activity in Jakarta was very important, especially for four and five star hotels.

He said four and five star hotels were expected to improve their occupancy rates slightly by five percent, to between 35 percent and 40 percent, this year.

Meanwhile, three star hotels are projected to enjoy a higher growth rate of 10 percent to an average of 50 percent.

He said occupancy rates at three star hotels would be able to grow more because their main market, the domestic business community and travelers, had started to resume activities since last year following the relatively peaceful presidential election.

Tourism industry expert Diyak Mulahela said top-end hotels would likely stop their discount war this year because of improving occupancy rates and cash flow positions.

The hotel industry has experienced a financial downturn and tighter competition, in line with the dramatic fall in most business activities in the country since the monetary crisis in mid-1997.

Jakarta has been considered as a less desirable destination, hence its visitors numbers have begun to drop.

Hoteliers, struggling to keep their operations running amid skyrocketing operational costs, have cut their costs. Revenue is being generated from other services such as food and beverages outlets.

"With their current cheap rates, many big hotels are not able to gain adequate profits, even when all their rooms are occupied. So they must adjust their room rates," Diyak said.

Djodi predicted average room rates for Jakarta's five star hotels, especially those located in the premier business district around Jl. Sudirman and Jl. MH Thamrin, would rise slightly to around US$80, from $75 in 1999 but lower than the $105 offered in 1998.

An economist from the University of Gajah Mada, Sri Adiningsih, warned the process of recovery in the ailing hotel industry this year would still be vulnerable to the country's social and political situation.

She said a full recovery in the hotel business could be accomplished only if supported by a vigorous economic recovery with a stable political environment.

"The problem is that indicators of economic recovery are still fragile as they are very much dependent on the uncertain development of the country's politics," she said.

Djodi shared Sri's opinion and said that any disruption to political stability would scare away tourists and businesspeople.

Assuming that Indonesia's economy grows positively this year and without political disruption, the government expects to see between 5.4 million and six million inbound arrivals this year, bringing in roughly $6.3 billion.

The country received 3.9 million foreign visitors in 1999, contributing about $3.4 billion in foreign exchange.

Indonesia currently has over 822 star-rated hotels, mostly located in Jakarta and Bali, with a total of 83,707 rooms.

Djodi said no new hotel rooms were expected this year as most of the current available ones were still vacant. (cst)