Indonesian Hospitality Sector to Grow in 2014: Realtors

By The Jakarta Globe on 08:46 pm Nov 14, 2013
Category Business, Markets

Built during 19th century, Bandung’s Savoy Homann Bidakara Hotel boasts a long and rich history that includes hosting several famous guests. (Photo courtesy of Savoy Homann Bidakara Hotel and Goen Guy Gunawan)

Built during 19th century, Bandung’s Savoy Homann Bidakara Hotel boasts a long and rich history that includes hosting famous guests. (Photo courtesy of Savoy Homann Bidakara Hotel and Goen Guy Gunawan)

Indonesia will continue to see a healthy demand for hotel rooms, especially in Jakarta and Bali, and may see a growth in overall occupancy rates next year, real estate firm Cushman & Wakefield said in Asia Hotel View 2014, its publication.

“The demand for hotel rooms in Jakarta is expected to continue positively in the year ahead,” Arief Rahardjo, the firm’s senior associate director, wrote in a Thursday press release. “Though further increase in room supply is expected in the next 12 months, the overall occupancy rate is forecast to increase further.”

Some 221.5 million international tourists visited Asia in 2012, or 7.2 percent more than in 2011, according to the firm. Indonesia was among the top hotel market in Asia Pacific lasy year, in term of revenue per available room, placing third after Thailand and Hong Kong.

Southeast Asia was ahead of all other subregions, with a 9.9 percent year-on-year increase in arrivals.

Across Asia, authorities are expanding the capacities of airports, railways and seaports while enhancing city connectivity and infrastructure as part of efforts to boost tourism.

Arief also said Bali, in addition to Jakarta, was expected to see growing tourism.

“Bali’s market continues to hold a positive outlook, given its leisure demand,” he said. “It is also emerging as a new destination for weddings, as well as for its wellness and spas. With growing tourist arrivals each year, Bali’s hospitality market has been growing consistently over the past few years. The improvement in Ngurah Rai International Airport is going to give a boost to Bali’s tourism infrastructure, providing strength and exposure for holding more MICE activities.”

International hotel groups are expanding rapidly in China, India and Indonesia.

Akshay Kulkarni, the Asia regional director of the firm’s hospitality group, said several hotel markets have had a large supply influx of rooms in the past year or so and that this has led to falling revenue per available room.

“However, we expect much of the excess supply to get absorbed soon on the back of strong tourism demand,” he said. “As occupancy starts increasing, we will see room rates rising upwards in most markets. RevPAR growth in Asian hotel markets is expected to turn positive in 2014. The only exception is likely to be Seoul, which is seeing an unprecedented pipeline of lea 15,000rooms over the next two to three years, doubling the current supply.”

The hospitality investment market in Asia has seen substantial capital investing in Japan, Singapore and China so far this year. The total volume of investment value in hospitality assets reached $5.16 billion in the first half of the year and, or more than 53 percent up from the same period last year.

The firm expects 2013 investment volumes to reach $10-12 billion, making the year a record-holder for hospitality investment after the global financial crisis.