Jakarta: Hotel

Demand

As at YTD May 2014, international visitor arrivals to Jakarta registered a 6.6% y-o-y improvement to 0.9 million. All top ten geographical source markets recorded a y-o-y increase as at YTD March 2014, with significant improvements in arrivals from Saudi Arabia (+61%), Malaysia (+16.3%), Singapore (+10.2%), Taiwan (+10.1%) and India (+10%).

The Ministry of Culture and Tourism Indonesia launched several initiatives in 2013 to develop sharia tourism and promote Indonesia as a Muslim friendly destination. The Ministry of Culture and Tourism Indonesia is targeting a total of 200,000 Muslim visitors to Indonesia in 2014, a 25% y-o-y increase from 2013.

Supply

In 2Q14, there were a few new major openings including the 151-room The Grove Suites by Aston, the 253-room DoubleTree Diponegoro and the 240-room Ibis Jakarta Cawang. In 1H14, we estimate that a total of 1,158 rooms opened and upcoming supply in 2H14 will total 2,460 rooms. Hotels in the pipeline comprise primarily of economy and upscale brands which are currently present in Jakarta including ibis, Best Western, Swiss-Belinn and Harris. Upscale and luxury hotels openings in 2H14 are limited to the 180-room Raffles at Ciputra World and the 275-room JW Marriott at Kemang Village.

Asset Performance

As at YTD May 2014, occupancy recorded a marginal 0.7 percentage points decline to 64.3% while Average Daily Rates (ADR) showed a 3.2% y-o-y decrease to USD 182 which can be attributed to the depreciation of the Indonesian Rupiah. Indonesia’s central bank has allowed for the depreciation of the Indonesian Rupiah in an attempt to boost the competitiveness of the country’s exports which will have a positive impact on the country’s trade balance. Comparatively, ADR showed a significant improvement of 15.7% to IDR 2.1 million resulting in Revenue per Available Room (RevPAR) growth of 14.5% to IDR 1.4 million.

On a moving annual average, upscale hotel RevPAR levels remained steady, achieving levels above USD 111 from May 2013 to May 2014. This can be attributed to the stable occupancy levels and ADR levels during this period.

12-Month Outlook

Indonesia’s macroeconomic fundamentals remain strong and with the decline in inflationary pressures in 2013, foreign capital inflows showed a significant improvement. Similarly, the outlook for the domestic economy is relatively positive as government spending remains robust, boosted by the elections and strong consumer confidence. Hence, international and domestic visitor arrivals to Jakarta are likely to continue on the growth trajectory in the short to medium term as visitors to Jakarta comprises mainly of corporate travellers. The limited number of upscale and luxury hotel additions in the pipeline are also likely to result in stable trading performances of these sectors while the midscale and economy hotel expansions continue.

Note: Jakarta Hotels refers to Jakarta’s Upscale hotel market.