Market Trends of Indonesia Hospitality Real Estate Industry
Increase in Tourism in Indonesia
- Despite a global economic slump, Indonesia, the largest country in Southeast Asia, is witnessing a surge in both inbound and domestic tourism. Simultaneously, Indonesians are exploring their own country like never before.
- With a rising influx of tourists and business travelers, Indonesia's hotel industry is set to witness substantial growth in the coming years. The deepening integration of the ASEAN economy and more affordable airfares are proving to be advantageous for Indonesian hotels and ancillary businesses, helping them navigate through localized oversupply challenges.
- In 2023, Indonesia witnessed about 11.68 million international visitor arrivals. The number significantly increased compared to the previous year, i.e., 5.89 million. Visitor arrivals were distributed among 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.
- Highlighting this trend, Indonesian Statistics (BPS) reported that from January to October 2023, the country saw 9.49 million tourist arrivals, surpassing the government's initial target of 7.4 million for the year.
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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.
- Industry experts predict a significant surge in Jakarta's hotel sector in 2024. In 2023, the market saw the addition of 1,706 rooms, marking a 2.7% YoY growth. Looking ahead, from 2023 to 2025, the hotel supply is forecasted to grow at an annual rate of 2.6%. In the coming years, the midscale to upscale segment is expected to witness a surge in new supply openings. Notably, a significant 41% of this new supply is attributed to renowned serviced apartment brands, including Ascott, Somerset, Citadines, and PARKROYAL. These factors collectively underscore the positive growth outlook for Indonesia's hospitality sector in the coming years.
