(MENAFNEditorial)
SURABAYA March 3 2015 – The falling performance of hotel sector in early 2015 may motivate the investors to postpone their capital investment plans in East Java.
Chairman of Indonesian Hotel and Restaurant Association (PHRI) East Java M. Sholeh said the hotel business condition at early of this year was not satisfying. Ever since the circulars on the ban for state employees to have meetings in hotels the occupancy level of hotels in East Java dropped to only 35%-40% throughout January-February 2015.
“In fact hotels could get profit once the occupancy level reaches 50% at minimum. This brings lower profit to the business players up to 50%. Based on the information the new investors decide to postpone the hotel development in East Java especially in Surabaya while waiting for the positive development of hotel market” he said to Indonesia Business Daily Monday (3/2/2015).
In addition he said the occupancy decline was also caused by the travel warning made by the US and Australia Embassy to their people to not visit Surabaya as well as the freezing of a number of flights two months ago.
Other than the occupancy decline the operational cost of hotels reportedly also escalated up to 25% caused by the labor wage which absorbed 28% of the total operational costs fuel price hike (15%) electricity tariff (20%) gas (20%) and transportation costs. Read more…
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