APPD Market Report Article
JakartaMay 31, 2022
Domestic demand continues to recover, with international to follow
- International visitors reached a record low in 2021, totalling just 119,419 which was around 5% of 2019 levels amid continued border closures. While figures are still significantly below pre-pandemic era, the 308.9% y-o-y growth in YTD February 2022 suggest that recovery was already on the mend even prior to the full reopening of international borders.
- Domestic demand has been the major demand driver for hotels in Jakarta since the COVID-19 pandemic, and is likely to remain the key driver for most of 2022. However, with the recent full reopening of borders, international demand is likely to pick up for the rest of 2022 which bodes well for luxury hotels that rely heavily on foreign corporate demand.
No new major openings in 1Q22
- Hotel openings have remained limited since the COVID-19 pandemic, as most planned openings throughout the last two years have been shelved due to limited demand. This has remained the case in 1Q22, with no new major hotel opening in the city.
- For the rest of 2022, eight lodging properties offering around 1,550 rooms are slated to enter the market, all of which except one property are located within the Golden Triangle of Jakarta. Serviced apartments will account for around 41% of total incoming room supply.
Ongoing RevPAR recovery likely to accelerate
- Revenue per available room (RevPAR) rose by 84.1% y-o-y as of YTD March 2022, driven by growth in occupancy which rose 11.2 ppts to 47%, while average daily rate (ADR) rose 40.6% to IDR 2.0 million. Sustained improvement in occupancy rates driven primarily by domestic demand has given confidence for hotels to gradually increase rate levels again.
- The recent reopening of borders is expected to facilitate the gradual return of higher-spending international corporate guests, which should help boost overall ADR levels. Occupancy is also expected to recover as both international and domestic visitation improves.
Outlook: Regional reopening likely to bolster Jakarta’s hotel recovery
- Recent full reopening of borders in neighbouring countries, namely Singapore and Malaysia, is expected to provide a major boost to regional travel, especially for corporates. Jakarta is expected to benefit greatly from the reopening of both markets given that both countries were amongst the top source markets to the city pre-pandemic.
- Full recovery, however, will likely take some time as demand from other major markets from North Asia will likely remain muted in the near term due to continued COVID-19 restrictions. Further, the current geopolitical and inflationary environment may result in the curtailment of corporate demand which will weigh on the recovery.