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)