Hotel occupancy rate inches up in 2000

JAKARTA (JP): Indonesia's hotel industry remained in the doldrums in 2000, with average occupancy rates of all star-and- non-star hotels only inching up to 40 percent from 38 percent in 1999, according to an independent survey.

Diyak Mulahela, director of the Institute for Information on Tourism Development which conducted the study, said such a low occupancy rate for most hotels meant that they were operating at a loss.

Some hotels, however, enjoyed an average occupancy rate as high as 70 percent during the year, while the worst performers saw an average occupancy rate of only 20 percent, he said.

Many hotels survived the year through drastic cost-cutting measures, Diyak said.

One of these is by cutting back on staffing levels, some by between 4 and 5 percent through early retirement schemes. The survey said that employees' payroll accounts for between 9 and 25 percent of a hotel's total operational costs.

Other hotels were forced to introduce efficiency measures with regard to the use of electricity, water and fuels. Utilities account for between 10 and 13 percent of total costs.

While some hotels managed to stay afloat, many have had to defer repaying their debts, Diyak said.

Ahmad Zacky Siradj, executive director of the Indonesian Hotel and Restaurant Association, said a hotel normally breaks even if it has an average occupancy rate of 70 percent through the year.

Diyak said occupancy rates rose slightly this year thanks to the rise in the number of foreign tourists visiting the country.

The government said foreign tourist arrivals reached 3.45 million between January and October, nearly a 6 percent increase over the same period in 1999.

The institute predicts that the average occupancy rate of all hotels in Indonesia will increase to 45 percent in 2001 based on the government's target of 5.4 million foreign tourist arrivals.

Ahmad agreed that the increase next year would not be significant because Indonesia continues to suffer a poor public relations image with constant news reports of political unrest.

"We need a better PR campaign," he said.

He urged the government to increase the budget for promotion to draw more foreign tourists into Indonesia.

The Ministry of Culture and Tourism spent US$1 million on the promotion of tourism in 1999 during which 4.7 million foreigners visited the country, contributing $4.7 billion to Indonesia's foreign exchange earnings.

Ahmad warned that the government's plan to impose a $50 fee on tourist visas would deter some foreigners from visiting the country.

Tourist arrivals

Meanwhile Minister of Culture and Tourism I Gede Ardika said on Thursday that his office had set a target to attract up to 5.4 million foreign tourists to Indonesia in 2001, a 5 percent increase from the 5.1 million targeted for this year.

Ardika said that 5.4 million tourists would bring in US$ 5.4 billion worth of foreign exchange, assuming that each tourist spends $100 a day and stays an average of 10 days.

To reach the target, he said the Ministry of Culture and Tourism had improved its promotion strategy, especially in Indonesia's traditional markets such as Japan, Taiwan, Germany, the United States and the Netherlands.

The ministry would also expand the target market to include China, Middle Eastern countries, South Africa and Eastern Europe, he said.

Regarding goals to lure 5.1 million foreign tourists this year, Ardika expressed optimism that the target could still be reached.

The ministry recorded 3.5 million foreign tourists entering Indonesia through 13 gates from January to October.

"The number could increase if we count those who entered ports and came by land transportation," Ardika was quoted by Antara as saying.

Popular destinations among tourists this year include Bali, Yogyakarta, Jakarta and Bintan Island in Riau.

Ardika expressed hope that more foreign tourists would come to the country if political tensions ease.(05/rid)