House supports hotel firm for more govt equity

House supports hotel firm for more govt equity

JAKARTA (JP): The House of Representatives will support PT
Hotel Indonesia International Corporation and Natour's quest for
more government equity investment to improve the financial
structure of the state-owned hotel management firm.

The decision was taken during a hearing between the company's
executives and members of the tourism and transportation
commission of the House of Representatives. The meeting was held
in the Bali Room of Hotel Indonesia yesterday.

The company's president, Indra Setiawan, said that a
subsidiary of his company, Hotel Indonesia International, has
suffered a total loss of more than Rp 22 billion (US$9.35
million) a year since 1993.

"The refurbishment of Hotel Bali Beach, now called the Grand
Bali Beach, cost Rp 90 billion, of which Rp 75 billion was
derived from bank loans," he said. "The company still has
responsibilities of paying Rp 20 billion a year."

Indra said his company is likely to suffer losses of Rp 27.59
billion this year.

Hotel Bali Beach, one of 7 hotels managed by Hotel Indonesia
International, was gutted by fire in 1993. The fire caused Hotel
Indonesia International to suffer increasing losses to refurbish
its hotel.

Meanwhile, Natour, the other subsidiary of Hotel Indonesia
International, gained a profit of Rp 2.6 billion in 1995 after
suffering a Rp 2.2-billion loss the previous year.

Hotel Indonesia International was merged with Natour in
September 1993 to improve both companies' efficiency. Currently,
Hotel Indonesia International, set up in 1962, runs seven hotels
with 2,329 rooms. Natour, established in 1953, manages 10 hotels
with 1,065 rooms.

The merged company has financial problems due to hotel
refurbishments. A team of officials from several ministries was
established soon after the merger to consider whether the company
should become a holding company. The team also looked to win
government financial support for the refurbishment of its aging
hotels. The team has never reported its results.

"More equity form the government is one of the best solutions
to restore the company's financial soundness," Indra claimed
after the hearing.

House members warned Indra that equity support from the
government must be followed by better management and efficiency.

"The company's poor financial performance had been reported
before the fire at Bali Beach Hotel," a House member warned.

Indra said his company plans a multimillion dollar
refurbishment of some of its time-worn hotels in order to face
the fierce competition in Indonesia's hotel industry.

"One of the proposed projects is the renovation of Jakarta's
Hotel Indonesia and Hotel Wisata," he said.

Private firms have been invited to help develop a megaproject
under either a build, transfer and operate scheme or build,
operate and own arrangement. They can also establish a joint
venture.

The project is a super block of luxury hotels, apartments and
shopping complexes on a six-hectare plot between Hotel Wisata and
Hotel Indonesia.

A couple of private firms showed interest in the Jakarta
development project several years ago, but there has been no real
commitment. (icn)