Hotel Negotiations Differ Among Indonesian Cities

<I>Jakarta</I> - A surge of new hotels has shaken up rate negotiations in Indonesia's two largest cities, each with its own cultural approach to striking deals with corporate clients.

While paying a high rate is a sign of power and prestige in Jakarta, dealmakers in Surabaya tend to prize their haggling skills, said Australian transplant Trudy Bennett, director of marketing for the Surabaya Shangri-La hotel. "Hotel companies in Surabaya know all their competitors' [negotiated] rates, because everyone talks about it," she said. "Bids aren't confidential here."

International business, which has been moored in the traffic-choked capital of more than 10 million people, has begun to spill over into Surabaya-a city where 70 percent of the population lacks electricity and the expatriates employ servants.

North American companies that have set up a base in this locally driven manufacturing town include GE, Johnson & Johnson, Nestle, Nike and Unilever. And hotel room inventory jumped 44.8 percent last year, as Mandarin Oriental, Sheraton and Westin joined the Hyatt and two-year-old Shangri-La. Upcoming hotels include an Inter-Continental, slated for a '98 debut.

"With Surabaya being a new market, we have to cut deals," said Shangri-La general manager Michael Cottan, whose American clients include ARCO, AT&T Network Systems, Citibank, Coca-Cola, DuPont, Excelcomindo and Motorola. "In Jakarta, people are used to a set rate structure in the hotels. Here, as we're further from central government, there's more wheeling and dealing." In fact, 95 percent of the hotel's customers hold some type of volume-based rate deal, Cottan said, although the hotel has tried to veer from the current pricing war.

Battling for market share, Shangri-La's new competitors in Surabaya have slashed corporate rates up to 25 percent, Bennett said, while her hotel has opted instead to dole out extra benefits to build loyalty.

Beginning this month and running through September, the Shangri-La will add complimentary airport pickup, buffet breakfast and local calls, plus 50 percent off dry cleaning and 20 percent off business-center services.

Through June, return guests gain a gift voucher-choosing from complimentary upgrade, breakfast, massage or restaurant discounts-and frequent-guest club members earn double points.

The domestic market still accounts for 65 percent of guests, followed by 12 to 15 percent from Japan and 8 to 9 percent from Singapore.

Meanwhile, an invasion of new hotels is set to hit Jakarta as well, doubling room inventory by 1999.

John Segreti, the American general manager of the three-year-old Shangri-La Jakarta-whose corporate clients include ARCO, Chase Manhattan, Citibank, Esso, IBM and Mobil Oil-counts only the Grand Hyatt and Regent as rivals, but dozens of contenders are setting up shop in the capital.

Sheraton joined the roster in January, and Dallas-based Rosewood will add a hotel later this year. The Hyatt and Pan Pacific hotels have emerged from renovations this year, the latter featuring two new floors of extended-stay corporate apartments. The Inter-Continental also will reopen this year after shutting down more than a year ago for a $75 million overhaul.

The Marco Polo group, which added an Omni last year, will debut a second Jakarta property in 1998. Next year also will see the Kempinski, Novotel, Traders and Westin flags, while Marriott plans to unveil a property in 1999.

Readying for the influx of business travelers, Jakarta has set out to tackle its traffic-ridden streets-where vendors weave through the cars hawking popcorn, peanuts and water-with a subway system slated to open its first line by 2003.

So far, Jakarta's construction boom has yielded a mix of New York-like skyscrapers surrounded by tropical villages.

"From the swankiest office building, you can look down and see tin shacks," pointed out Thomas Matthews, vice president and director of PT ABB Energy Systems Indonesia.

While the international influx has begun to recast Jakarta and Surabaya as cosmopolitan cities, Indonesian customs prevail, often tripping up foreign business travelers. Local businesspeople often show up hours late for appointments, yet expect expatriates to arrive on time. "I was once 10 minutes late for a sales call, and the guy refused to see me," said Shangri-La's Cottan.

"Rubber Time" crosses into evening as well, with a 7 p.m. affair often kicking off at 11 p.m., said Neil Storey, general manager of the Mal Galaxy shopping mall. "It's the fool who shows up on time.