Safety Issues Lower Indonesian Room Rates

<B> Safety Issues Lower Indonesian Room Rates</B>

By Robert Selwitz

In the period between last year's political upheaval that led to President Suharto's resignation and this June's national elections, the proverbial dust seems to have settled upon Indonesia. But during this quiescent period, few are willing to assume that calm, as well as the once-booming international trade, have permanently returned. Nevertheless, a cross section of major hotel operators who cater to business travelers appear to be cautiously optimistic, and anxious to reassure everyone within ear shot that the commercial climate is on the rebound.

Ted Teng, president of Starwood Hotel and Resorts in Asia Pacific, for example, said that until the 1998 riots, "hotels were being built at a pace that assumed continued fast-paced growth. When the problems started, not only was the growth squelched, but occupancies also plummeted. Today, while business is starting to come back, we are faced with a badly over-built situation. As a result we're dealing with rates for five star properties as low as $60 per night."

Speaking for Mandarin Oriental Hotel Group's pair of Indonesia properties, Jill Kluge reported that its Jakarta hotel's current average rate is $85, 10 percent below that for the same time period of 1998, and its Hotel Majapahit in Surabaya now costs $40 per night, 5 percent above last year's rates. These average rates compare with published superior room rates of $119 in Jakarta and $49 in Surabaya.

Occupancy rates in Jakarta have risen to 36 percent, compared with 28 percent during 1998, and to 25 percent in Surabaya, a 5 percent raise from last year.

Nuni S. Rasad, public relations manager for The Regent Jakarta, said that in the first three months of this year, "The Regent Jakarta's occupancy continued to climb. Presently, it's above 35 percent. The ever-lasting crisis puts the city hotels in very tight competition due to the lower numbers of foreign visitors. We expect business in general will most probably fall again within the months leading up to the scheduled general election on June 7, 1999. However, the business community expects an influx of investors to follow soon after."

Shangri-La in Jakarta director of marketing Trudy Moreno said the 668-room hotel is running a 63.9 percent month-to-date occupancy level, compared with 39 percent when the first Jakarta disturbances occurred last year. She also expressed confidence that "there have been no incidents or riots within Jakarta for more than seven months. In fact, the nearest disturbances have occurred no closer than 500 miles from Jakarta."

Moreno attributed her property's unscathed emergence from the trouble to its geography. "Though a short ride from downtown we are located off a major interchange. Also, we have a river in front of the hotel that acts as a virtual moat. And we are not along regular pedestrian pathways."

She also said the Shangri-La in Jakarta is fortunate in not being owned by anyone in the now-disgraced Suharto family or upper echelon military officers Suharto favored. While those relationships once were a significant business advantage, "today, it is quite the opposite, and properties with affiliations to the former government have been quite near, or the site or target of political demonstrations." Moreno advised business travelers to be aware of such linkages.

While in Jakarta, Moreno urged, foreign visitors should book their transportation in advance for a business day or for an evening outside their hotel. Similarly they should arrange airport/hotel transfers in advance. "Having transportation ready and waiting certainly beats chasing taxis every time you need to move," she said.

While political demonstrations never were aimed at foreign travelers, concierges in quality hotels will know which, if any, areas to avoid. Encountering political protests is unlikely, but there has been a rise in petty crime in the city due to high unemployment, she added.

Among the seven Hyatt properties in Indonesia, five are in the country's main business centers. Current rates for either a single or double at the Hyatts are: $130 at the Grand Hyatt Bali, $80 at the Bali Hyatt, $75 in Bandung, $149 in Grand Jakarta, $95 in Aryduta Jakarta, $89 in Surabaya and $95 in Yogyakarta.

A Jakarta-based Hyatt spokesperson reported that "business travelers now can freely move in areas that previously experienced unrest. Caution, of course, should be applied when traveling at night."

Bruce Moore, general manager at the Hotel Sari Pan Pacific in Jakarta, agreed that "the current economic, political and social crisis that Indonesia is experiencing has effected all industries, including the hotel sector. Particularly in the cities that depend on business travelers, hotels are experiencing record low occupancies and low average rates." Jakarta's Hotel Sari Pan Pacific currently is running at 40 percent occupancy, with an average rate of $80.

To attract travelers or extend their stays, the property currently is offering the Pacific Plus Package (room and breakfast) at $90 in a superior room, $115 on the Pacific Floor and $140 for a two-room suite on the Penthouse Floors. The Pacific and Penthouse Floors have private lounges where breakfast and complimentary evening cocktails are served. On weekends, the rates can be as low as $60. All rates are subject to 21 percent tax and service.

As for the current atmosphere, Moore said that "despite a reported rise in personal crime (resulting from economic need, not any negative emotions towards westerners), Jakarta is still a safe city and a place full of business opportunities." Like any large city in the world, there are some security issues and travelers are reminded to be sensible about where they go and when. In short, the current Jakarta scene is very much business as usual. "U.S. business travelers are free to travel anywhere in the city that their needs take them," he said.