Star-rated hotels go for modest hike in rates
Star-rated hotels go for modest hike in rates
Arya Abhiseka, The Jakarta Post, Jakarta
Luxury hotels in Jakarta, faced with weak demand and
oversupply, will likely increase their room rates within the
range 3 percent to 5 percent in response to this month's hikes in
fuel, telephone and electricity prices.
Chairman of Jakarta International Hotel Association George
Benney said the hikes in utility rates would tremendously affect
major four- or five-star hotels in the capital.
But most hotel managements would have to absorb the higher
costs rather than passing them on to customers.
"The rise will not exceed 5 percent. We have an oversupply of
hotels in this city," Benney said.
"As a result, hotel managements are trying to limit rate
increases to prevent sales from dropping," said the general
manager of Jakarta Mandarin Oriental hotel.
"Our operating costs are high. Unlike smaller hotels, we
cannot turn off our electricity, water and air conditioner on
days that occupancy levels are low," he said.
The hotel industry throughout Indonesia has been badly hit
since the Oct. 12 bombing in Bali, especially after the U.S. and
other Western governments issued warnings to their citizens
against traveling to Indonesia.
Most luxury hotels had still to fully recover from the impact
of the 1998 financial crisis, which forced them to change their
rates to rupiah from U.S. dollars, when the Bali bombing had a
damaging impact on occupancy.
Mandarin Oriental, for example, currently charges Rp 825,000
(US$91) for a deluxe room per night for Indonesian patrons and
$109 for non-Indonesians. Jakarta Hilton International sets its
room rates at Rp 649,000 to Rp 849,000 for its Indonesian guests.
Both hotels charge dollar rates for their suites.
Benney pointed out that after last week's 6 percent increase
in electricity rates, the power cost of running a five-star hotel
in Jakarta would be double that of a hotel of the same caliber in
Kuala Lumpur.
"That is what kills us. Customers are limiting their spending
due to the uncertain economic and security outlook," he said.
He recalled that most hotels reported rising occupancy rates
last year before the Bali bomb blast.
In order to bring tourists back to Indonesia, hotels would be
heavily dependent on the country's stability, security, image and
public relations.
"The government must take charge on the public relations side,
in communicating to the world that the country is safe for
tourists," he said.