Indonesian Hotel Occupancy Rises, but Business Owners Remain Anxious
The Indonesian Hotel and Restaurant Association (PHRI) assesses that the rise in hotel occupancy throughout the first half of 2026 is not yet a signal that the hospitality industry has fully recovered. Although room occupancy rates increased during the Eid al-Fitr and school holiday periods, hotel operators still face major challenges as revenues have not improved accordingly.
PHRI Secretary General Maulana Yusran stated that the increase in occupancy during the second quarter of 2026 was primarily driven by the school holiday momentum. In several tourist destinations, occupancy even increased by approximately 20%-30% compared to regular days. However, he noted that this increase is merely seasonal and does not reflect a fundamental improvement in the industry.
“So the answer to whether it has recovered is: no, it hasn’t actually recovered. It is certainly not recovered, and now we are facing new challenges, such as the Iran conflict which increases operational costs and the cost of travelling, impacting the market,” Maulana told CNBC Indonesia on Friday (31/07/2026).
He explained that compared to the post-Covid-19 condition, the hotel industry’s performance had been steadily improving from 2021 to 2024. However, that trend reversed in 2025 after government budget efficiency policies suppressed corporate activities, particularly Meetings, Incentives, Conventions, and Exhibitions (MICE).
According to Maulana, based on data from the Indonesian Central Statistics Agency (BPS), the national average hotel occupancy until May 2026 remained at 46.96%. This figure is still lower than the average occupancy in 2024, which reached 52.50%.
“When talking about 2026, we are still comparing it to whether 2025 increased or not. Post-Covid, we hoped that 2026 would be higher than 2024, which was 52.50% year-on-year. But looking at our records and BPS data, the average year-on-year up to May 2026 is still 46.96%. So, it is still below 2024,” he added.
In addition to the incomplete recovery of occupancy, PHRI also highlighted that hotel revenues remain under pressure. Maulana stated that high occupancy rates do not necessarily lead to increased revenue, as hotels must still compete by offering discounts to attract guests.
He noted that since the Covid-19 pandemic, hotels have found it increasingly difficult to enjoy ‘high season’ periods, which are typically the momentum used to raise room rates. “In terms of household consumption, they pay a certain amount but receive smaller services. In a hotel, you might achieve high occupancy, but your revenue does not match the rates expected during a high season. Even if occupancy is 80%, the rate might not increase because hotels are still competing with nearby competitors for a limited market,” concluded Maulana.