Yogyakarta Hoteliers Reveal Profits Slump Despite Guest Surge

Hotel occupancy in Yogyakarta increased by up to 20 per cent during June compared to normal levels. However, this surge has not translated into higher profits for hotel operators. On the contrary, several hoteliers under the auspices of the Indonesian Hotel and Restaurant Association (PHRI) in the Special Region of Yogyakarta (DIY) have reported a decline in earnings despite the rise in occupancy. PHRI DIY Chairman Deddy Pranowo stated that hotel occupancy rates reached 70 per cent during June, a 20 per cent increase compared to regular days or previous school holiday periods. “Based on reservations, our data from 17 June to 25 June shows an average of 70 per cent. This applies to both star-rated and non-star-rated hotels among our members in DIY. The central city area (Kota Jogja) and Sleman still dominate,” Deddy explained. He noted that the 20 per cent rise in occupancy was accompanied by a surge in operational costs that hoteliers must bear. “Seventy per cent does not mean conditions are fine. The increase in occupancy is also accompanied by a rise in operational costs. Raw materials are up, air conditioning servicing is up, everything is going up now,” he said. Deddy explained that operational costs have risen by between 15 and 25 per cent. Hoteliers are also reluctant to raise room rates because they believe public purchasing power remains weak. “We cannot adjust room prices to match operational costs. Why? Because people’s purchasing power is currently declining. So PHRI members are merely surviving,” he said. Hotel operators have chosen not to increase room rates, fearing that doing so would drive guests away. “There is an increase in operational costs, but we are not yet brave enough to raise prices. Rather than having no guests, we end up just making enough to survive. In terms of occupancy, it is up, but in terms of revenue, we are down,” he stated. Another issue affecting profits was the impact of recent power disruptions. Deddy noted that the outages caused damage to several pieces of equipment. “The impact added to operational costs. We had to buy diesel, Pertadex. That increases costs,” he said. “Around four to five hotels reported damage to electronic goods such as water heaters, televisions, computers, and others. Repairing those also adds to the cost,” he clarified. To reduce expenditure, hotels are implementing energy efficiency measures. However, Deddy assured that efficiency is not achieved by reducing service quality for guests. “For example, we turn off lights or close off unused areas. But we would not dare to lower service quality or hospitality standards. Efficiency must not damage the hotel’s image,” he concluded.