In 2012, international arrivals to Jakarta via the Soekarno-Hatta International Airport (SHIA) were recorded at 2.1 million, representing a 6.3% y-o-y increase. As at YTD July 2013, direct foreign arrivals to Jakarta registered a 7.3% y-o-y rise to 1,270,000 visitors with the top source markets being Malaysia, Mainland China, Japan, Singapore and South Korea.
Domestic passenger traffic to and from Jakarta registered an increase of 11.5% y-o-y to 19.7 million passengers in 2012, but recorded a modest 0.5% y-o-y decline as at YTD July 2013. Jakarta continues to be dependent on domestic demand, especially from the corporate and Meetings, Incentives, Conventions, and Exhibitions (MICE) segments.
There were five hotels that opened during 3Q13, adding 747 rooms to the market. The new hotels are the All Seasons Gajah Mada, All Seasons Thamrin, Best Western Mega Kuningan, Best Western Hariston and Ibis Senen. An additional 1,300 rooms are anticipated to come on stream in the last quarter of the year, a 10.1% y-o-y increase over 2012 if all rooms materialise.
The short term forecast hotel supply is dominated by midscale and economy hotels with Accor’s select service brand, ibis, having the largest pipeline. The 180-room Raffles Jakarta at Ciputra World 1 is the only luxury hotel scheduled to open in 4Q13. In the short to medium term, budget hotel supply is likely to grow at a faster pace, driven by domestic operators such as favehotel and Amaris.
As at YTD August 2013, occupancy recorded a 1.0 percentage point increase to 65.1% while Average Daily Rates (ADR) registered a 13.2% y-o-y growth to USD 166, resulting in a 14.3% y-o-y increase in Revenue per Available Room (RevPAR) to USD 108. The robust trading performance in the upscale market can be attributed to strong domestic demand and positive business sentiment. In contrast, hotels in the midscale sector recorded limited change in occupancy and ADR, possibly due to the notable growth in midscale hotel supply in 2013 which has not been fully absorbed by the market.
Domestic and international corporate demand is likely to remain strong, in view of government efforts to attract multinational corporations. With limited addition to hotel room supply in 4Q13, market occupancy is expected to stabilise while ADR growth is likely to remain strong in the upscale hotel market. Following the 45% minimum wage increment which was approved in 2012, the fuel price hike in late June 2013 is expected to contribute to ADR growth as the cost may be passed on to hotel guests.
Note: Jakarta Hotels refers to Jakarta’s Upscale hotel market.