Yogyakarta Hoteliers Complain of Falling Profits Despite Rising Occupancy

Hotel operators under the Indonesian Hotel and Restaurant Association (PHRI) in the Special Region of Yogyakarta (DIY) have voiced complaints that their profits are declining, even as occupancy rates rise during the school holiday season. PHRI DIY Chairman Deddy Pranowo explained that hotel occupancy had increased to 70 percent in June, a 20 percent rise compared to normal days or previous school holiday periods. “Based on reservations, data from 17 June to 25 June shows an average of 70 percent occupancy, for both star-rated and non-star hotels among our members in DIY. It is still dominated by the central city area (Yogyakarta city) and Sleman,” Deddy said when contacted on Thursday (25/6/2026).

Despite the increase, Deddy revealed that operational costs borne by hotels have also soared. “Seventy percent does not mean conditions are fine. The increase in occupancy is accompanied by a rise in operational costs. Raw material costs are up, air conditioning servicing is up, everything is up now,” he said. He detailed that operational costs have risen by 15 to 25 percent. Hotel operators are also reluctant to raise room rates because consumer purchasing power is considered weak. “We cannot adjust room rates to match operational costs. Why? Because people’s purchasing power is currently declining. So PHRI members are currently just surviving,” he said.

He continued that if operators dared to change room tariffs, they feared the number of guests would be eroded. “There is an increase in operational costs, but we have not dared to raise prices. Rather than having no guests, in the end this is only enough to survive. In terms of occupancy it is up, but in terms of revenue we are down,” he stated. In addition to rising operational costs, Deddy noted that another difficulty experienced by hotels was the recent power disruption. He said reports indicated that some equipment had even suffered damage. “The impact adds to operational costs. We have to buy diesel, Pertadex. That adds to the cost,” he said. “Around four to five hotels reported damage to electronic goods such as water heaters, TVs, computers, and others. Repairing them also adds to costs,” he explained. To reduce expenditure, hotels are implementing energy efficiency measures. However, Deddy assured that efficiency is not achieved by reducing the quality of service to guests. “What is done, for example, is turning off lights or unused areas. But we do not dare to lower the quality of service or hospitality. Efficiency must not damage the hotel’s image,” he concluded.