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)