Hoteliers complain of hefty tax

Hoteliers complain of hefty tax

JAKARTA (JP): Hoteliers in the capital city are complaining about excessive tax payments which can hamper the growth of their businesses.

"Hotels in Jakarta, which run several side businesses in addition to their room supply, have to pay development tax, entertainment tax and value added tax," chairman of the Association of the Jakarta Hotel Comptrollers, Diyak Mulahela, said yesterday.

He explained that the city administration imposes three kinds of taxes, including the 10 percent development tax, 25 percent entertainment tax and 10 percent of value added tax, on hotels.

Diyak said that the growth of the hotel industry in Jakarta is very fast, while the growth rate of visitors is slow.

He said that there were 16,238 hotel rooms (in 68 star-rated and 159 non-star-rated hotels) in the city in September 1994. By September this year, the number of the hotel rooms reached 18,849 (74 star-rated and 159 non-star-rated hotels), showing a 16 percent increase in the room supply.

"Meanwhile, in the same period, the figure of foreign and domestic visitors in the city increased by just 3 percent and 2 percent respectively," he said, adding that many investors are still interested in developing new hotels here.

Diyak, who is also a director of the Institute for the Development of Tourism Information, said that to avoid declines in revenues, the hotels create side businesses by establishing more merchandise outlets as revenue centers.

"Most hotels used to get 70 percent of their revenues from room operation. But now many of them obtain 40 percent to 80 percent of their revenues from side businesses, such as food and beverage divisions, business centers, fitness centers and space leasing," he said.

"Since the hotels run various businesses, they have to pay all of the taxes, instead of just one or two kinds of taxes," he said, complaining that the city administration should realize the actual challenges faced by hotels. (icn)