Jakarta's five star hotels in doldrums amid tourism slump: Consultant

The Jakarta Post, Jakarta

Five star hotels in the Greater Jakarta area have borne the worst impact of the slump in tourism that has hit the country following the global economic slowdown and the Sept. 11 terrorist attacks on the United States, a property consultant said on Thursday.

Colliers Jardine Indonesia, referring to its latest "Greater Jakarta Hotel Market" report, said on Thursday that the occupancy rate at Jakarta's five star hotels was less than 35 percent in the third quarter of the year.

Generally, the company said, these deluxe hotels have been beset by an excessive supply of rooms and a limited demand for them due to the dwindling tourist arrivals following the economic slowdown and the terrorist attacks.

So far, 15 five-star hotel projects in the capital with 1,883 rooms in the pipeline have been canceled or deferred due to the deepening economic crisis, the company said.

"Spiraling operational costs induced by inflation, coupled with the recent increase in utility charges have led to a 11.5 percent increase in the average room rate of five star hotels to US$66 per room per night.

"This will further undermine the appeal of five-star accommodation against three and four star hotels, which are more competitive due to their affordable rates for ordinary visitors," company managing director Richard Rossiter said.

As of the third quarter this year, five star hotels with a total of 8,878 rooms, account for 41 percent of Greater Jakarta's hotel stock, followed by four star hotels with 8,012 rooms or 37 percent and three star hotels with 4,764 rooms or 22 percent.

Three and four star hotels, being more affordable to ordinary tourists, fared better in the third quarter than their five star counterparts. Some of them have even increased their room rates whilst maintaining occupancy rates at a reasonable level, Rossiter added.

Over all, demand for hotel rooms in Greater Jakarta remained largely stagnant with only 46 percent of the total stock taken up during the third quarter, he said.

Rossiter said the country's hotel industry would remain in the doldrums for the next 12 months.

"It is widely anticipated that the local hotel industry will only start to recover in the later part of 2002 on the back of a rebound in the macro economy. When this happens, three star hotels are likely to lead the market recovery with a higher occupancy level of almost 78 percent.

"Yet, the market for four and five-star hotels will remain depressed pending further signs of a global and local economic recovery over the coming one-to-two years," he said.