What to expect from Jakarta’s hotel property sector in the coming years

There will be more 3-star hotels expected to be completed in 2024.

Because of improved market conditions, a Colliers report said many hotel projects have resumed construction. The supply of all types of new hotels is expected to increase beginning in 2023. Their locations are dominated by the Central Jakarta, CBD and West Jakarta areas. 

“Meanwhile, two hotels, Park Hyatt and St Regis, opening in 2022. Both are 5-star hotels located near Jakarta’s business district. With this new supply, the total room supply now stands at 44,855 rooms,” the report said.

Here’s more from Colliers:

It is expected that 4-star and 5-star hotels will receive new supply in 2023. It is expected that there will be more supply in the 3-star category in 2024. The supply of 3-star hotels experienced a decrease between 2020 and 2022. 

This is very likely due to the fact that the hospitality industry experienced a downturn at the start of the pandemic and lost many guests. As a result, hotel owners were forced to close their hotels because there were no guests and they were unable to compete with 4-star and 5-star hotels.

The increase in the number of foreign tourist arrivals is directly proportional to the increase in hotel occupancy rates, as was witnessed from April to July 2022, after which foreign tourist visits became more volatile, though not as dramatically as in previous months, after which foreign tourist visits became more volatile, though not as dramatically as in previous months. 

The rise in the number of offline activities towards the end of the year is a breath of fresh air for hoteliers, especially for activities that involve a large number of people, such as music concerts, conventions and exhibitions. Even if the event was not held at the hotel, hotels located nearby became more crowded as many guests chose to stay nearby. 

Furthermore, activities such as meetings, seminars, gatherings and so forth, both organised by the government and corporations, are increasingly being held in hotels. In addition, in advance of the G20 preparations, many pre-G20 activities were held in several cities, one of which was Jakarta. These activities brought new life to the Jakarta hotel industry Another interesting factor is that with the loosening of social restrictions, the room usage capacity can reach 80% or more or higher; as a result, many weddings with large groups have begun to be held in hotels. 

After a two-year hiatus, hotels will host New Year's Eve celebrations. Since the end of Q3 2022, promotions for Christmas and New Year’s events were heavily promoted. Hoteliers are more confident with current conditions in the sense that the spread of Covid-19 has begun to be controlled, making everything more stable.

In terms of performance, monthly occupancy has increased while ADR has decreased; however, overall performance in 2022 has increased significantly when compared to the previous two years. The decrease in ADR was caused by hoteliers offering group discounts in advance. Some hotels continue to prioritise pursuing occupancy over pursuing price. Given the recent positive trend, it is expected that hoteliers will begin to raise room rates in the coming years to catch up with the rates of the previous two years.