Star-rated hotels in fiercer rate war
By I. Christianto
JAKARTA (JP): The price war in the hotel industry is becoming fiercer with expensive hotels offering not only big discounts but also special packages to lure guests in the dwindling market.
Several four and five-star rated hotels in the capital have offered discounts of up to 50 percent for their standard rooms.
To attract more guests, the five-star Sahid Jaya hotel, for instance, has launched a special sales promotion from October to December offering a rate of US$99 for business rooms, far below its published rate of $175.
Sahid's assistant director of sales, Sadikin K., said last week that his hotel has also launched a holiday package priced at Rp 265,000 (about $75) per night and a New Year's price of $150.
The hotel's public relations officer, Shinta Langka, said that everybody had to see what was going on with the economy.
"The rupiah has been up and down. Hotels must have gimmicks to keep alive," she said.
"The price war has begun, but we have to keep the quality," she said.
Sahid Jaya is not alone. The newly-opened luxurious Mulia Hotel in Senayan has set its room rates at $89 since its opening in September for an unlimited period.
The four-star Golden Hotel on Jl. Angkasa is offering $57 for standard single rooms from between June and December.
The five-star Borobudur Intercontinental, which was just relaunched, is offering a special rate of $150 between August and December, much cheaper than the published rate of $240.
Several other luxurious hotels like Regent and the Grand Hyatt are offering discounts only for weekends.
For weekends, Regent offers a special rate of only $140, almost a half of the normal price of $260. The Grand Hyatt charges $210 for weekends and $290 for weekdays. But an attendant at the Grand Hyatt said that the rates were negotiable.
Sluggish market
Analysts said that the drop in foreign tourists is not the only reason for the sluggish market. The cut in corporate spending of the country's biggest companies in the face of the monetary crisis, which has reduced the value of rupiah against the U.S. dollar by about 35 percent since early July, is one of the main factors.
But unlike their more expensive competitors, three-star and non-rated hotels seem yet to have felt the brunt of the economic situation. A three-star hotel in the tourist-popular Jl. Jaksa area, Cemara hotel, could still charge its old rate of $84 per night.
"We have a full occupancy rate this month," an attendant said, adding that her hotel had 72 rooms.
Another three-star hotel in the area, Arcadia, set a published rate of $98 for weekdays. The rates are $59 and $69 for weekends, for single and double rooms respectively.
The hotels in Indonesia set room rates in U.S. dollars. But in terms of rupiah, the hotel rates are still relatively more stable than those before the monetary crisis hit the country.
Many hoteliers even offer special rupiah rates, much lower than the market rates as part of a promotion package to lure guests.
Minister of Tourism, Post and Telecommunications Joop Ave said in a recent hearing with the House of Representatives that the price war was inevitable.
"But remember, reducing rates is easier than increasing them. So star-rated hotels must be careful."
Thick haze, which recently enveloped most of Kalimantan and Sumatra, as well as Singapore and Malaysia, has scared away foreign visitors. Many travelers and tour groups from European and Asian nations have canceled their trips to Indonesia.
Lower arrival
According to new data provided by his office, about 5.19 million foreign tourists will have visited the country by the end of this year, lower than the original projection of between 5.3 million and 5.7 million arrivals.
In Jakarta, according to the Hong-Kong-based PKF Consulting Limited, the occupancy rate in August 1997 was 60.7 percent, up by 2.1 percent over 59.4 percent in August 1996. But the average daily room rate dropped by 4.1 percent to $97.94 in August 1997 from $102.1 in the same month last year (in rupiah, however, it rose by 19.4 percent). Revenue per available room was down by 2.1 percent to $59.41 in August 1997 from $60.66 in August 1996 (in rupiah it rose by 21.9 percent).
In its latest report, PKF said that in August 1997, compared to the same month last year, the average daily room rate for upper-tier hotels in Jakarta (average room rate above Rp 230,000), rose by 2.3 percent to $117.3 from $114.67 (in rupiah it rose by 27.3 percent). Revenue per available room was down by 0.1 percent to $71.11 from $71.17 (in rupiah it rose by 24.4 percent).
In the capital's lower-tier hotels (average room rate below Rp 230,000), the average daily room rate dropped by 5.6 percent to $83.56 from $88.52 (in rupiah it rose by 17.5 percent). Revenue per available room rose by 0.8 percent to $50.71 from $50.29 (in rupiah it rose by 25.5 percent).
PKF said that in Bali, the occupancy rate in August 1997 was 82.9 percent, a drop of 0.7 percent compared to 83.5 percent in August 1996. The average daily room rate had also dropped by 7.3 percent to $72.91 in August 1997 from $78.61 in the same month last year (in rupiah it rose by 15.4 percent). Revenue per available room dropped by 7.9 percent to $60.43 in August 1997 from $65.63 in August 1996 (in rupiah it rose by 14.6 percent).
Also in August 1997, compared to August 1996, in Bali's upper- tier hotels (average room rate above Rp 170,000), the average daily room rate dropped by 8 percent to $105.03 from $114.19 (in rupiah it rose by 14.5 percent). Revenue per available room was down by 7.9 percent to $77.38 from $83.99 (in rupiah it rose by 14.7 percent).