Indonesia reports declining hotel occupancy rates

Hotels across Indonesia have recorded a fall in their occupancy rates over the last few months, despite the recent holiday season and a sharp increase in foreign tourist arrivals.

Hoteliers have rejected concerns that the decline in occupancy rates had been caused by an increased supply of accommodation — particularly budget hotels — in the country’s main tourist destinations.

Instead, they attributed the drop on the fact that both the fasting month of Ramadan and the presidential election took place in July, which discouraged tourists from lengthening their stays.

Even though occupancy rates picked up during the week-long Idul Fitri holiday, it wasn’t enough to offset the heavy drop during the fasting month, said Cyprianus Aoer, executive director of the Indonesian Hotel and Restaurant Association (PHRI).

“Only hotels located in tourist destinations, such as Bali, experienced an increase in occupancy in June and July. Cities like Jakarta, in contrast, suffered low occupancy during the holiday season, which inevitably affects the national figure,” Cyprianus told The Jakarta Post on Wednesday.

Occupancy rates at star-rated hotels in 27 of the country’s 34 provinces reached an average 40.09 per cent in July this year, down 10.81 percentage points from 50.90 per cent in July last year, Central Statistics Agency (BPS) data shows.

The country’s hotel industry saw a similar weakening trend in June, which recorded a 55.4 per cent occupancy rate, down 1.18 points from 56.58 per cent in June last year.

“The industry is indeed facing tighter competition, but it has no direct effect on the occupancy rate, especially amid the sharp increase in the number of foreign tourists,” Cyprianus said.

“With the increased number of tourists this year, we are optimistic that the decline in occupancy will not be too significant, even though we are seeing a lot of new hotels joining the industry,” he continued.

BPS data shows that 5.32 million foreign travellers entered Indonesia from January through July this year, up 9.37 per cent from the same period last year.

Other than Ramadhan, the presidential election taking place in July was a key reason behind people opting to postpone their holidays or shorten their lengths of stay, according to Hotel Mulia Jakarta spokeswoman Romy Herlambang.

“The occupancy rate, particularly in Jakarta in July, was lower than in June this year as well as July last year because of the election, as a lot of people decided to postpone their trip and shorten their stay,” she said.

The situation in Bali, however, was the complete reverse, with the Hotel Mulia there fully booked in July, as summer holidays began in several parts of the world, she added.

The increased supply of hotel rooms nationwide had not impacted the Hotel Mulia’s occupancy rate, as the five-star hotel targeted the upper-class market, according to Romy.

“The Hotel Mulia has its own market. Therefore, even though the country has seen a mushrooming of new hotels, particularly two-and three-star hotels, it hasn’t had an effect on our occupancy rate,” she said.

The Tourism and Creative Economy Ministry’s head of foreign cooperation, Noviendi Makalam, previously said that the lower occupancy rates and shorter stays were also due to slower economic growth in travellers’ countries of origin, including European countries and China, causing many people to shorten their holidays.

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