Market Trends of Indonesia Hospitality Real Estate Industry
Increase in Tourism in Indonesia
Despite the global and domestic economic slump, Indonesia, Southeast Asia's largest country, continues to draw an increasing number of tourists. At the same time, Indonesians are traveling around the country in unprecedented numbers.
As more tourists and businesspeople visit the country, hotel demand is expected to expand dramatically in the next few years and decades. Intensifying ASEAN economic integration and increasingly affordable airfares are boons for Indonesian hotels and related businesses and should help the industry overcome the present oversupply difficulties in some locations.
In 2022, there were about 5.47 million international visitor arrivals in Indonesia, the number significantly increased in comparison to the previous year. The visitor arrivals were distributed amongst the various ports of entry in Indonesia. International tourism to Indonesia has been increasing over the years, and Indonesia has become a popular holiday destination.
According to the Indonesian Statistics (BPS), from January to October 2023, Indonesia recorded 9.49 million tourist arrivals, higher than the government target of 7.4 million at the beginning of this year 2023.
Increase in construction of Hotels and Accommodation
The hotel business in Indonesia is well developed, with everything from five-star hotels to simple guesthouses. The majority of the opulent resorts are on the island of Bali, which is Indonesia's most popular leisure destination.
The majority of hotels in Jakarta and other cities cater to business travelers. Due to the considerable increase in hotel supply, there has been much discussion about the anticipated impact on hotel asset prices over the next few years, which may be influenced by an increase in the number of domestic and foreign tourists, particularly in secondary cities across the country.
In 2021, there were 29 openings with 4,913 rooms, and in 2022, there were 16 launches with 3,097 keys. However, half of Indonesia's active hotel pipeline will not open for several years, with 64 hotels and 12,118 on the books for 2023 and beyond. Two-thirds of the 127 new hotels will be four-star hotels, with the remaining third being five-star hotels.
Bali leads the way, with 23 planned openings and 3,876 new rooms under construction, but Jakarta is not far behind, with 21 hotels and 3,569 keys in the works. Surabaya and Bandung will each get seven new hotels with a total of 1,734 and 1,257 rooms, respectively. Bintan will round out the top five with four new hotels with a total of 810 rooms.
