Star-rated hotels in fiercer rate war

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).