Jakarta thrives on domestic travel

JAKARTA, 3 July 2019: While Jakarta Indonesia is transforming into an Asian megacity, it has yet to capture a broader slice of international travellers.

In 2018, the city’s hotels hosted over 13 million guests, yet 86% were from the domestic segment.

In a newly released report, the Jakarta Hotel Market Review from hospitality consulting group C9 Hotelworks notes that over 2.7 million overseas passengers arrived at the gateway Soekarno-Hatta International Airport last year.

Over a 10-year period, the compound annual growth rate hit an impressive 7.4%.

Yet, the reality is that Indonesia’s largely domestic economic marketplace remains the key spotlight as public sector infrastructure is playing catch up with ongoing mass transportation developments trying to link the city’s spread of mini-metros.

A key outcome of the domestic feeding frenzy is that Indonesian conglomerates and real estate groups are developing massive integrated mixed-use properties with global luxury operators.

A quick name check of the accommodation pipeline features well-known names such as Park Hyatt. Waldorf Astoria, St. Regis, W, Regent and Langham.

While historically the influx of overseas guests are business travellers visiting during peak mid-week periods. They usually leave the Indonesian capital as the weekend approaches.

This leaves hotels with the choice of either lower room rates for the domestic market or else empty beds.

Jakarta’s international geographic source of the business profile has seen Mainland China in the top position since 2015, with a five-year CAGR of 9%.

Rounding out the top five are Malaysia, Japan, Singapore and Saudi Arabia. There have been few surprises during the past few years yet two international sporting events, the 2018 Asia and Para Asian games pushed market-wide demand higher.

Looking forward, C9 Hotelworks managing director Bill Barnett said: “it’s unclear if the new luxury pipeline will dramatically induce the overseas market.

“Until there are broader economic reforms that will positively impact FDI (foreign direct investment) and improvements in commuting to CBD areas, the domestic segment is likely to remain firmly entrenched in the driver’s seat of Jakarta hotel performance.”

To download the full report, click the following link: