What to expect from Jakarta’s hotel market moving forward

Monthly occupancy rates haven’t reached below 50% so far this year.

After 18 months without any new supply, Jakarta finally saw a new hotel project from the operation of Park Hyatt Hotel. According to Colliers, a total of 223 operating hotels in Jakarta provide 44,696 rooms as of Q3. 

Given that the overall hotel market performance is still below par, with occupancy and room rates that have yet to reach a normal level, the addition of new rooms makes competition tighter.

Here’s more from Colliers:

Since the Covid outbreak in early 2020, the hospitality sector was one of the property industries that has been significantly affected. Since the outbreak, hotel supply in Jakarta only saw an additional 1,088 new rooms. The low demand forced hotels to take strategies to survive the onslaught of the pandemic. Some were forced to close their operations, but some are still operating, even if only partially. Some also took advantage of this time to improve their premises with renovations and refurbishments to the hotel. 

The strategy taken by most hoteliers was to operate the hotel in stages. The main functions of a hotel, such as rooms and main restaurants, have been operating as before, but small outlets such as restaurants, bars, spas and other supporting facilities were operated in stages, adjusting to market conditions.

The performance of hotels in Jakarta in 2022 has been in a positive direction. Throughout 2022, monthly occupancy rates have not dropped below 50%. There was a decline in April but it mainly coincided with the fasting month (Ramadan) when many activities for both business and individuals were held off. After the slowdown, starting in May and running through August, the monthly performance was never less than 55%. 

At the end of Q1 2022, the government abolished the repatriation requirement for all international travellers. As a result, hoteliers whose hotels had become repatriation locations lost some of their market. However, on the positive side, the abolition of repatriation and regulations regarding foreign travel agents has increased the number of foreign tourist arrivals through Soekarno-Hatta; ever since March the average monthly visit has grown by 50%.

Currently, Jakarta is at PPKM (public activity restriction) level 1, so according to the regulations, the use of MICE venues can be optimised up to 100%; however, some guests still opt to use venues with 80% capacity. MICE revenue has yet to become optimum, but at least there has been an increase, especially now that the market is not merely from government activities. The corporate as well as individual market, such as for wedding and nongovernment/corporate events, are increasingly becoming more vibrant. 

This is increasingly promising because Indonesia is currently the host of the G20 Summit. The highlight of the G20 event will be held in November 2022 in Bali, but a series of activities have started since the beginning of 2022 in several cities in Indonesia, one of which is in Jakarta. As a result, the performance of hotels in Jakarta has also lifted. 

This positive trend is expected to be maintained until mid Q4 2022 (November), but then will decline in mid-December due to the Christmas and New Year’s holidays. Hotel performance in 2023 can only be estimated at the end of 2022; however, the increasingly uncertain global economic conditions are likely to impact the hospitality industry. At this stage it is difficult to predict the effect; however, if the number of travellers, both domestic and foreign, decreases, this will certainly contract the performance of hotels.