The Regent opens after three-year delay

By Rita A. Widiadana

JAKARTA (JP): After a few years of delay, the Regent of Jakarta is finally ready to enter the fierce competition in the city's hotel business.

"It is really God's blessing that the hotel is finally opening. Two years ago, we thought that this ceremony would never take place," noted Said Umar Husin at the hotel's opening last week.

Said, president of PT Permadani Khatulistiwa Nusantara (PT PKN), the owner of the new hotel, is confident that the establishment will provide customers with the best facilities and services.

Construction of the Regent of Jakarta was turbulent. Started in l988, the project was suspended for almost three years due to financial problems of the owners.

The hotel, managed by PT PKN (a subsidiary of Kongsi Delapan or Kodel Business Group), was previously scheduled to start operation in l991.

Earlier reports said that the three-year postponement was caused primarily by increases in construction costs from an earlier estimate of only US$150 million to $235.2 million (the final total investment).

A senior banker, quoted by the now defunct Tempo weekly, said that the Regent project was overpriced and not economically feasible. The banker maintained that costs in the project's original proposal made by Kodel were marked up.

In one instance, the company estimated the land price at $1,000 per square meter, much higher than the normal prices of $200 to $300 per square meter at the time the project was proposed.

"Honestly, many state banks were quite suspicious that the proposed loan would be used not only for the construction of the hotel but also for financing the company's other projects," the banker maintained. As a result, many prospective partners and banks were not interested in the project, according to the banker.

The cloud overshadowing the project was cleared when a bank syndicate consisting of Bank Dagang Negara (BDN), Bank Negara Indonesia (BNI), Bank Bumi Daya (BBD) and Bank Duta agreed to provide loans to continue the project.

"The bank syndicate eventually agreed to provide loans because the project was still regarded as viable," explained Pala Neloe of BDN during the Regent's soft opening. "If we didn't support it, the project would have become a white elephant."

When construction was first halted the hotel's exterior had almost been finished.

Investment

The total investment of the 2.4 hectare hotel project reached $235.2 million; $163.41 million of which was derived from loans, $71.8 million from new equity capital and the remaining $26.4 million from Kodel Group's equity shares.

The composition of the hotel's shareholders can be divided into three groups: The quartet -- Fahmi Idris, Soegeng Sarjadi, Said Umar Husin and Maher Algadrie -- which holds 43 percent; the bank syndicate with 52 percent; and the Four Seasons-Regent Hotel chain, which manages the hotel, with five percent.

In addition to financial troubles, the project also encountered a series of technical obstacles.

Soegeng Sarjadi explained that the hotel designer, the San Francisco-based architectural firm of Skidmore, Owens and Merril, had set a very high standard for the hotel's design and construction which included the use of imported materials such as Italian marble and granite for both the interior and exterior.

Paid off

Nevertheless, the tireless efforts of PT PKN and its partners have apparently paid off.

The lobby area, spacious and bright, looks onto a stately courtyard with towering royal palm trees. The Plaza Wing connects the lobby area with the Regent Wing, a five-story tower that includes the 3,000 square foot Regent suite.

On the other side of the lobby is the Garden Wing which leads to tennis courts, a swimming pool area and a health center by way of a large open area called the Verandah.

Upon entering the foyer of the lobby, four floor-to-ceiling panels of natural teak, two on either side, have an immediate visual impact. These intricately carved panels represent the life forces of fire, water, earth and air and are inspired by 15th century limestone carvings discovered in a mosque in Jepara, Central Java.

Michael Burchett, the General Manager of the Regent, insisted that the Regent of Jakarta has a distinct market segment--the traveling businessmen.

"We expect an occupancy rate of 68 to 70 percent within one year of opening," Burchett said confidently.

However, the Regent may likely compete directly with the Grand Hyatt, Hilton and the Shangri-La Hotel.

Peter A. Collins of the PT Collier Jardines said in the l995 edition of the company's Asia-Pacific Property Trends and The Jakarta Property Market that tight competition in the hotel business is expected to continue especially in the deluxe class.

According to the review, the total supply of quality hotel rooms in the greater Jakarta area is currently 12,300, 43 percent of which belong to five-star rated hotels.

Approximately 1,000 three-star, and 800 five-star rooms will come on line this year.

Arman Rachman Iskandar, chairman of the Jakarta branch of the Indonesian Hotel and Restaurant Association, noted that the emergence of new hotels will increase competition.

However, international hotel chains like the Regent, he said, have an advantage over others in that they are linked into worldwide marketing networks.

To face the competition, The Regent boasts the largest average bedroom size in the city. Each of the 364 guest rooms and suites offers a minimum of 55 square meters.

Furthermore, each room has been designed to help traveling executives attain the highest level of productivity by providing numerous amenities such as executive desks, telephones, personal computers connections, IDD, in-room fax machines and other business equipment.

The Regent will introduce Regent Private Reserve, a corporate travel program for companies which can commit a minimum of 60 nights per annum to The Regent.

Participating companies will enjoy a number of benefits including preferred corporate room rates, priority reservations, executive suite upgrades and complimentary limousine services.

The rates are set at $265 for the standard room and $2,000 or more for suite rooms throughout the soft opening.