Occupancy rates remain high despite fall in new demand

Occupancy rates remain high despite fall in new demand

Sudibyo M. Wiradji, Contributor, Jakarta

Although the Oct. Bali bombing severely hurt the country's
hotel industry, the occupancy at expensive apartments remains
relatively high.

The bombing attacks last year that had scared foreigners,
either investors or tourists, to come to Indonesia only affected
new demand, apartment owners said.

"Apartments are designed for long-term stay, and our existing
occupants will stay, provided that the situation does not
endanger them individually and the companies where they work are
not closed down," said senior marketing executive Herlina of
Executive Menteng Apartment.

Due to their long-term lease contracts, the Bali tragedy has
not made any significant changes in terms of occupation rates.
"At our apartment, occupants who have returned to their countries
(following the Bali incident) account for between one and two
percent," she said.

The average length of stay in most apartments is between one
and two years, but unlike previous years, most clients prefer to
pay on a one-year basis. "They will pay additional rental fees
only when they have decided to extend their stay," she said.

Although there has been a decline in new demand, most
apartment owners in Jakarta have no plans to lower their leases.
"What we should do is maintain the quality of our services," said
Herlina.

Executive Menteng Apartment, which has 240 apartment units,
expects an occupation rate of between 98 percent and 99 percent
this year. "Our minimum target is 97 percent," she said.

Despite the declining number of foreigners in Indonesia, the
management had no intention to shift the target market from
foreigners to locals as several hotels have done, she added.

Apartemen Golf Pondok Indah's Tower Two, which opened only
three months ago, has an occupation rate of 17 percent, partly
due to the decline in new demand in the market.

Unlike Tower Two, Tower One, which has been open for seven
years, has an occupancy rate of about 85 percent.

"Tower Two has only operated for few months. We hope that when
the situation improves, our occupation rate will also improve,"
said assistant apartment manager James U. Moniaga of Apartemen
Golf Pondok Indah.

"We try our best to maintain quality services and we even wish
to improve it," he added.

Their minimum occupation rate target for 2003 is 70 percent of
the 133 units in Tower Two. "In a bid to attract foreigners to
stay in Tower Two, we have kept the same rates," he explained.

The lease at Apartemen Golf Pondok Indah, strategically
located in the elite Pondok Indah residential area, is relatively
high compared to similar apartments of the same class. "Quality
service is our utmost priority," James said.

Plaza Residence, located on Jl. Jend. Sudirman in Central
Jakarta, managed to retain its occupancy rate of 100 percent
despite the decline in the number of foreigners visiting
Indonesia.

"The 100 percent occupancy rate has been maintained since two
years ago," said associate marketing manager Ratu Neilla of Plaza
Residence, adding that the 75 percent of its tenants were
Japanese nationals.

The Japanese know the high quality of Plaza Residence through
word-of-mouth, she said. "When bad things happen in Indonesia,
Japanese tend not to panic so easily," she said.

As part of its strategy to attract foreigners, especially
Japanese, the management at Plaza Residence had been trying to
boost the degree of comfort and convenience offered by the
apartment by completing necessary facilities, such as a shopping
gallery, a minimarket, a salon and a bar in the apartment
complex. "But, of course, we place quality as our top priority,"
Ratu said.

For Puri Casablanca Apartment, the drop in new demand from
foreigners has led to changes in the lease terms, from long-term
to short-term.

Puri Casablanca, which is located in the central area of
Kuningan, expects that its large apartment complexes, reasonable
prices, and good services would continue to lure foreigners to
stay.

"Our serviced apartment is also famous for its cleanliness and
its vast garden. Puri Casablanca is quite popular among people
with small families, as they can play with their children in our
garden areas," noted general manager Hans Pola at Puri Casablanca
Apartment.

"We recently launched a program in which tenants could opt for
a monthly payment scheme for our serviced apartments, in view of
the current political and economic situation. The program is very
effective as our tenants' cash flow is more manageable and in
fact, most of them have extended their stay with us," he said.

Puri Casablanca is comprised of four towers with 988 apartment
units and an average occupancy rate of 70 percent. The occupancy
rate of its serviced apartment tower is at 85 percent.

The apartment, which mainly targets Westerners, expects more
than 250 foreigners to check in this year. "We are very
optimistic that we will achieve the target, as our occupancy rate
has been increasing ever since we began operating the serviced
apartment concept," said Hans.

The Ascott Group Indonesia, which manages several apartment
complexes in the country, also saw an increase of between seven
percent and 20 percent in their occupancy rate last year.

"Currently, the occupancy rate is at about 80 percent, with an
average daily rate of US$75 for Jakarta properties," they said,
adding that the increase resulted from their brand awareness and
recognition campaign.

It is said that the possibility of a U.S. attack on Iraq, the
terrorist threat and Indonesia's general elections campaign to
commence in 2003 are factors that might affect the apartment
business outlook this year.

When it comes to luxury apartments, Indonesian occupants
account for a small percentage, with most preferring to buy the
unit instead.

"Most Indonesians who stay in the apartment are young
professionals, because older and established executives usually
prefer to live in their own house," said Herlina.

Practicality and comprehensive facilities are among the major
reasons why young Indonesian executives prefer staying in an
apartment.

At Puri Casablanca, the interest among Indonesians in living
at the apartment has grown over the past few years. As of now,
the ratio of foreign versus local tenants is about 70 to 30. For
serviced apartments, the ratio stands at 90 to 10.