Weak Demand Stalls Recovery of Indonesia’s Hotel and Restaurant Industry

KOMPAS.com – Weak consumer demand during the coronavirus pandemic has placed a heavy burden on Indonesia’s hotel and restaurant industry.

To make matters worse, the recovery of Indonesia’s hotel and restaurant industry relies on consumer demand and operational efficiency.

Maulana Yusran, Secretary-General of the Indonesian Association of Hotels & Restaurants, said the wide-ranging concerns about hotel and restaurant businesses in Indonesia as the coronavirus pandemic continue.

Challenges for hotels

Hotels in Indonesia are struggling to raise their profit which depends on several factors affecting daily sales, Maulana said.

Read also: Four Hotels in Jakarta Designated as Self-Isolation Centers

These include daily room sales, occupancy rate, and sales of food and beverages from events and meetings.

“What we see with hotel profits is that increased occupancy rate is not in line with the average room rates.”

In the new normal, the room rates of hotels in Indonesia have become significantly cheaper as seen during the long holiday weekend in October.

“Normally, for a three-day long weekend, the price is based on the published rate. For example, during the last long holiday weekend in Bali, the price of a hotel room should be Rp 1,500,000 ($103) per night. Instead, by paying only Rp 700,000 - Rp 800,000 ($48-$55) per night, an individual can stay at a five-star hotel in Indonesia.”

The rising occupancy rate does not guarantee an increase in the profit for hotels in Indonesia, she added.

Read also: This Hotel in Jakarta Made the Cut in the World’s 25 Best Hotels in 2020

Another burden that the hotel industry in Indonesia must shoulder is the increasing work-from-home lifestyle arising from the coronavirus pandemic that has damaged the earnings from Meeting, Incentive, Conference, and Exhibition (MICE) events.

Due to the adjustments in work arrangements in the new normal, Indonesia’s hotel industry has had near-zero demand for MICE events.

Challenges for restaurants

Shifting the sales method from offline to online is the main challenge facing Indonesia’s restaurant industry.

Prior to the coronavirus pandemic, restaurants across the archipelago could comfortably rely on offline types of sales.

Although the country has experienced digital acceleration, not all restaurants or small and medium enterprises are familiar with online sales.

Read also: Indonesian SMEs That Resisted Digital Adoption Collapsed during Pandemic

As such, several restaurants in Indonesia shifted from a dine-in concept to offering take-out and drive-thru services.

“Restaurants in Indonesia have made slight improvements not solely from the sales of food and beverages, but due to office workers and from increased social mobility. Work-from-home lifestyles present its own set of problems.”

Maulana explained that prior to enforcing work-from-home protocols, office workers would buy breakfast, snack, or a cup of coffee at a restaurant, but that has since slowed down.

As a result, Maulana shared that numerous restaurant outlets in Indonesia had to shut down due to a shortage of customers during the coronavirus pandemic.

(Writer: Syifa Nuri Khairunnisa | Editor: Anggara Wikan Prasetya)

Source: https://travel.kompas.com/read/2020/11/08/160400727/ini-tantangan-adaptasi-normal-baru-untuk-hotel-dan-restoran?page=all#page2