Jakarta Hotels’ Loss is Kalimantan’s Gain
How big is the slice of Jakarta hotels’ revenue lost to Kalimantan?
Mumours became reality last month with President Jokowi’s announcement that the capital would be relocated to Kalimantan. Whilst the global media scrambled to locate Balikpapan (yes, it’s different to Bali) and sensationalise the plight of the Bornean orangutan, we got to thinking about the effect it will have on Jakarta hotels’ bottom line.
Government driven room night demand (RND), both FIT and MICE, is integral to Jakarta hotels, so what are hoteliers going to do, how are they going to fill the burgeoning number of rooms, how big is that slice of pie?
To estimate the size of the slice, we needed to make some base assumptions.
- Base year: 2018 is a pretty good base year with: healthy 5.3% GDP growth; an improved unemployment rate (currently 5.3%); strong foreign direct investment (USD 27.8 million) boosted further by a weaker IDR; and the year preceding a national election is typically a strong stable year for hotels, before the tumult of an election year;
- DKI Jakarta provincial government will continue to generate room night demand;
- Jakarta will always be the country’s beating economic heart;
- A significant proportion of MICE RND in Jakarta is government related, including BUMN;
- Jakarta has 326 hotels, 46,899 rooms or around 144 keys / hotel (BPS, 2018); and
- The results in our annual Indonesia Hotel Industry Survey of Operations (purchase here) are demonstrative of Jakarta’s market mix, ADR and MICE covers.
Source: Horwath HTL, Indonesia Hotel Industry Study
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Cover Photo by: Zalfa Imani
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