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Indonesia Hospitality Real Estate Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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    Report

  • 120 Pages
  • August 2022
  • Region: Indonesia
  • Mordor Intelligence
  • ID: 5572619
The Indonesian hospitality real estate market is expected to register a CAGR of more than 7.3% during the forecast period (2022 - 2027). The Indonesian economy contracted by 2.07% Y-o-Y in 2020, according to the Central Statistics Agency (BPS), due to weakness in a number of key sectors. The economic crisis caused by the COVID-19 pandemic in 2020 had an influence on the hospitality real estate market, causing some projects to be postponed. Hotels and accommodations account for a big portion of the hospitality real estate market because they are the most necessary requirement for the growing number of tourists in the country as well as locals who enjoy vacationing on weekends or during certain times of the year. Tourism is the main engine for this industry, along with the relaxation of some tax and real estate restrictions, which have allowed both locals and foreigners to invest in and purchase buildings to perform the lucrative hospitality business in the country.

Tourism brought in significant foreign exchange inflows to Indonesia in the form of international tourism receipts, as well as investments and capital in tourism-related businesses. Tourism has typically resulted in infrastructure improvements for the local economy of the country. Although the number of domestic trips taken in Indonesia greatly outnumbers the number of foreign visitors, domestic tourists spend less than half of what international visitors do. In 2020, the government devised a strategy to protect the tourist sector from the effects of the COVID-19 outbreak by investing up to IDR 72 billion (USD 5.2 million) to pay influencers to promote the nation. The government also waived hotel and restaurant taxes in 10 tourist destinations, including Toba Lake regency in North Sumatra, Yogyakarta, Malang in East Java, Manado in North Sulawesi, Bali, Mandalika in West Nusa Tenggara, Labuan Bajo in East Nusa Tenggara, Bangka Belitung, and Batam and Bintan in the Riau Islands.

PT Indonesia Tourism Development (Persero) or Indonesia Tourism Development Corporation (ITDC) revealed in March 2021 that a luxury hotel being built worth IDR 709 billion is being worked on in Mandalika, West Nusa Tenggara (NTB). Pullman Mandalika Hotel was targeted to operate in the fourth quarter of 2021 and add tourism facilities at the Super Priority Tourism Destinations (DPSP). The National-scale Hotel Management, Liberta Hotels International, has again collaborated to develop and manage a new hotel as one of the first 3-star hotels in Nganjuk, the Capital of East Java Regency with PT. Build Griya Samawa as a developer. This hotel has 100 guest rooms, a ballroom, a meeting room, a restaurant, and a sky lounge bar, which began construction in the second quarter of 2021. The groundbreaking plan is expected to be carried out at the end of 2022.

Key Market Trends


Tourism in Indonesia is the Major Growth Driver for the Rise of the Hospitality Industry


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 business people visit the country, hotel demand is expected to expand dramatically in the next years and decades. Intensifying ASEAN economic integration and increasingly affordable airfares are boons for Indonesian hotels and allied businesses and should help the industry overcome the present oversupply difficulties in some locations.

As a number of community activity regulations are lifted, tourism businesses in Bali are still focused on maximizing revenue from local tourists. From January to September 2021, 1.18 million foreign tourists visited the country. The figure is a long way off from the 3.59 million individuals estimated for the same time period in 2020. In September 2021, foreign tourist visits to Indonesia totaled 126.51 thousand, down by 15.08% from the same month in the previous year. In September 2021, the number of foreign tourist visits increased by 1.41% compared to August 2021.

In September 2021, the Room Occupancy Rate (TPK) for star-class hotels in Indonesia was 36.64%, up by 4.52 percentage points from September 2020. When compared to the previous month's TPK, the TPK in September 2021 experienced a quite high gain of 11.57 points. Beyond the current glut in some areas, hundreds of new hotels are likely to be needed over the next decade, presenting the potential for domestic and foreign investors in the budget, standard, and luxury segments.



The Hotels and Accommodation Segment is Dominating the Market


The hotel business in Indonesia is well-developed, having 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 the fourth quarter of 2020, 18 hotels with 3,127 rooms opened across Indonesia, with nine of them still in the pre-opening phase. In 2021, there were another 29 openings with 4,913 rooms, and in 2022, there will be 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 receive seven new hotels, totaling 1,734 and 1,257 rooms, respectively, while Bintan will round out the top five with four new buildings, totaling 810 rooms.



Competitive Landscape


The Indonesian hospitality real estate market is highly fragmented, with businesses such as Plaza Indonesia Realty, Sinar Mas Land, Agung Podomoro Land, and Ciputra Group developing some of the country's most important hotel projects. International players, such as Tokyo Land Corporation, a Japanese property development corporation, are also increasing their presence in Indonesia. Indonesia, being one of the emerging real estate investment markets, has attracted international players, primarily from Asian countries. The hospitality real estate market in Indonesia is predicted to become more competitive in the coming years as a result of the government's favorable FDI policy.

Additional Benefits:

  • The market estimate (ME) sheet in Excel format
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Table of Contents

1 INTRODUCTION
1.1 Study Deliverables
1.2 Scope of the Study
2 RESEARCH METHODOLOGY3 EXECUTIVE SUMMARY
4 MARKET INSIGHTS AND DYNAMICS
4.1 Market Overview
4.2 Market Dynamics
4.2.1 Drivers
4.2.2 Restraints
4.2.3 Opportunities
4.3 Insights into Technological Innovation in the Hospitality Real Estate Sector
4.4 Insights into Urban Commercial Property Prices and Recent Hospitality RE Transactions
4.5 Industry Value Chain Analysis
4.6 Porter's Five Forces Analysis
4.7 Impact of COVID-19 on the Market
5 MARKET SEGMENTATION
5.1 Property Type
5.1.1 Hotels and Accommodation
5.1.2 Spas and Resorts
5.1.3 Other Property Types
6 COMPETITVE INTELLIGENCE
6.1 Market Concentration Overview
6.2 Company Profiles
6.2.1 Sinar Mas Land
6.2.2 Agung Podomoro Land
6.2.3 Plaza Indonesia Realty
6.2.4 Ciputra
6.2.5 Duta Anggada Realty
6.2.6 Permata Birama Sakti
6.2.7 PP Properti
6.2.8 Tokyu Land Corporation
6.2.9 Pakuwon Jati
6.2.10 PT Surya Semesta Internusa (Persero) Tbk*
7 INVESTMENT ANALYSIS8 FUTURE OUTLOOK OF THE SECTOR9 APPENDIX

Methodology

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