Hariyadi Sukamdani, president of the Indonesia Hotels and Restaurants Association (IHRA), stated that the association, in collaboration with the Indonesian Tourism Industry Association (GIPI), is actively pushing for the government to amend the regulation that restricts government agencies from holding events in hotels. However, he also urged members to reduce their reliance on this segment moving forward.
He said: “The hospitality industry, particularly in regional destinations in Indonesia, has been relying heavily on the government sector. We need to find a balance moving forward.”
For Swiss-Belhotel International in Indonesia, where the government sector plays a significant role in its overall business, the restrictions have had some impact. However, the company worked closely with its teams and partners to navigate the situation, according to Teresia Wibowo, regional director of sales and marketing for Indonesia.
“We have always focused on diversifying our offerings to ensure that we can meet the needs of various market segments. While the government sector was an important component, we are exploring other opportunities to fill any gaps,” she said.
Archipelago International, which operates hotels across the country and relies on the government market for 30 to 40 per cent of its business, has identified that government activities tend to decline every few years. This has prompted the company to take steps to diversify and expand its client base beyond government contracts to maintain business balance.
Archipelago International CEO John Flood told TTG Asia: “By appealing to a wider audience, such as corporate clients, families, and FIT, we can buffer against the effects of potential downturns and create a more resilient revenue stream.”
The recent years’ market diversification efforts have helped dampen the impact on business, according to Flood. He mentioned that, for example, the company achieved 97 per cent of its budgeted revenue in February and expects similar results in March. However, he noted that this period coincided with Ramadan, a traditionally slow month, making it difficult to determine how much of the performance was due to that versus actual government cutbacks.
Diversifying and penetrating new markets is also a strategy Santika Indonesia Hotels & Resorts is using to bridge the gap left by the government segment in its properties. Its
general manager of business development, Sudarsana, said: “The financial sector remains active, as do the pharmaceuticals and healthcare industries. We will organise health-related events to attract participants, particularly in major cities like Jakarta and Surabaya, and develop memberships that will eventually create social gatherings and weddings, especially in Jakarta and Surabaya.”
However, Sudarsana did not expect to see a significant impact immediately, considering how the government regulation has affected not only meetings but also overall business.
He explained that the government had not only restricted events in hotels but had also cut budgets across nearly all sectors. As a result, this had affected not only government agencies but also related companies, such as state-owned enterprises, contractors, and suppliers of government projects. He also mentioned that some regional governors had recently imposed restrictions on holding graduations in hotels, further closing another potential market for ballrooms.
As such, Sudarsana said that the business pie was shrinking significantly and the number of competitors was growing, which would lead to a price war, adding that his wish was for the regulation to change soon.
Flood added: “From experience, we know that new governments and governors, who took office in February, often take a few months to get organised. With over three million civil servants, it is essential to hold meetings in hotels, so we are confident that, in the next month or two, we will see a return of much of the government business.”
By Mimi Hudoyo
