Indonesia hotel sector to slim down on brands over the next decade

The Indonesia hospitality sector is streamlining the number of hotel brands operating in the country, most markedly in the budget segment, as land and construction prices increase in the next decade

While Indonesia is experiencing a middle class boom and the number of domestic travel reached 245 million trips last year, hotel room supply has outstripped traveler numbers in pace of growth and travellers are also now more cost-conscious, putting downward pressure on rate growth.

Presently many new operators are coming onto the market and there are approximately 60 brands in Indonesia. Marc Steinmeyer, president director, Tauzia Hotel Management, predicts that there will be "a natural cleaning up" in the market, and only about 10 will be brands left within a decade or so.

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Steinmeyer said the challenge for budget hotels is the increasing land cost especially in major cities like Jakarta and Surabaya. "Cost of construction is increasing more and more, and on the other hand, room rates are not increasing," Steinmeyer said. "Honestly, Indonesia has the best quality of hotel for the cheapest in Asia."

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