The Regent opens after three-year delay

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.