Star-rated hotels suffer from low occupancy rates

JAKARTA (JP): The economic maelstrom across the region and potential political tension in the country have contributed to a continued slowdown in the hotel business, hoteliers have said.

Star-rated international hotels have said the economic and political tensions have dragged down their occupancy rates to about 40 percent this month, compared to 80 percent during the peak season.

The country's hotels have mostly seen a decline in their occupancy rates to below 60 percent in the second half of last year due to the sharp decline in foreign tourist arrivals.

"The first month of the year is usually a slow month anyway, added to that, this year's Ramadhan fasting season -- another quiet season -- falls on January," Andreas Trauttmansdorff, the general manager of Sheraton Media Hotel and Towers, said Tuesday.

Trauttmansdorff said the sector would suffer more from the currency crisis, which had resulted in a drastic decline in the value of most currencies in the Southeast Asian region, as visitors from the region made up many of the hotel's guests.

He said he expected occupancy rates to pick up again next month, after the Islamic Idul Fitri holiday, but that it would drop again in March until after the presidential election.

The People's Consultative Assembly will convene in March to approve the State Policy Guidelines and elect a new president.

Trauttmansdorff said growing fears of social unrest occurring in Indonesia had prompted many potential visitors to cancel their plans to visit, even well-known places in the country such as Bali.

"This is the first time tour operators have canceled their tours to Bali ... and instead have changed to Thailand because of fears of unrest," he said after the hotel's breaking of the fast gathering Tuesday.

The public relations manager of Hotel Omni Batavia, Anthony John Ballay, said his hotel had to endure the same problem, with the occupancy rate at about 45 percent this month.

"Many of our guests are business guests, but there are some tourists and tour groups who have decided to cancel their visits here over concerns of the political situation," Ballay said.

Sporadic riots have taken place in several towns in the last two weeks as people protest skyrocketing prices of goods due to the impact of the rupiah's free fall against the U.S. dollar.

Analysts estimate social unrest could worsen in the future as uncertainty over the economy and political stability will likely continue to worsen.

Both Sari Pan Pacific Hotel and the Regent Jakarta admitted their occupancy rates were lower this month, but said it was not any lower than a normal slow season.

"The economic crisis might contribute to this slowdown slightly, but January is the month when businesspeople commonly do not travel," said Regent public relations manager Nuni Sutyoko Rasad.

In a slow season like this month, the hotel's occupancy rates were about 40 percent to 50 percent, half the rate during the peak season, Nuni told the Post.

Sari Pan Pacific director of marketing communications Satria Wira said the hotel's occupancy rate was also about 40 percent currently.

Competitiveness

Trauttmansdorff said another contributing factor to the decline in guests at the country's star-rated hotels was the weakening competitiveness of the hotels compared to counterparts in the region.

The currency crisis, which had more than halved the value of the rupiah, should be able to lure more visitors here, but room rates quoted in dollars at hotels made them less competitive than other countries such as Thailand, where the rates were quoted in baht, he said.

Most star-rated hotels in the country base their room rates on the U.S. dollar, which has appreciated against the rupiah by about 300 percent since the crisis began in July.

Director General of Tourism Andi Mappisameng said the hotels charged in dollars because their investment came from dollar- denominated foreign loans.

But the government has been urging hotels to begin using the rupiah in their transactions to help restore eroded confidence in the currency.

Jakarta's Sheraton Media and Sheraton Bandara, two of 12 American-based ITT Sheraton hotels in Indonesia, have begun to publish their room rates in rupiah.

Trauttmansdorff said by quoting the room rates in rupiah, he believed the hotels would be more competitive in the market, and that hotels would also take part in the role of strengthening the rupiah.

"It's better to contribute as much as we can to strengthen the rupiah back to around Rp 5,000, for example, than to continue charging in dollars and letting the market diminish," he said.

Some hotels, such as Omni Batavia, have begun charging in rupiah for certain room packages.

"We have started using the rupiah since October through a package designed for domestic guests and foreign residents," Ballay said.

Ballay said the transition to the rupiah had boosted domestic guests, which currently made up about 50 percent of the hotel's guests.

Other hotels have declared they are not daring enough to quote their room rates in rupiah, other than for special packages, at least until it becomes the prevalent currency for room rates at most local hotels.

"We offer a weekend family package in rupiah, but other than that, we are still charging in dollars, using the daily exchange rate," Satria said.

Regent's Nuni said the hotel had not decided whether it would continue charging in dollars, "but if every hotel charges in rupiah, we will follow suit." (das)