Domestic demand remains the key driver due to border closures

• International demand remained subdued due to continued travel restrictions, but has seen a gradual improvement in recent months as the COVID-19 situation improved. International visitation totalled 102,670 as of YTD November 2021, marking a 73.8% y-o-y decline. On a positive note, there are growing signs of borders reopening in the region that comprised major source markets to Jakarta.
• Domestic tourism remains the existing key demand driver for luxury hotels, albeit overall demand remains below historical levels due to the lack of international corporate visitors. A surge in occupancy rates in recent months suggests that domestic demand has recovered following the COVID-19 wave in the middle of the year.

Four hotels offering 678 rooms opened in 2021

• Hotel openings remain limited in 2021 compared to historical years, with just four major openings totalling 678 rooms. Openings in the 2H21 include the 223-room Langham Jakarta and the 176-room Somerset Sudirman Jakarta. Several planned openings in 2021 have either been shelved to a later date or postponed indefinitely amid construction delays and muted demand due to border closures.
• Ten lodging properties offering around 1,900 rooms are slated to open in 2022, a substantial pick-up from the last two years due to a spillover of delayed openings since the onset of the COVID-19 pandemic. Serviced apartments is expected to account for around 30% of upcoming rooms in 2022.

RevPAR recovery driven by domestic-led occupancy rebound

• Revenue per available room (RevPAR) rose by 51.3% y-o-y in 2021, driven primarily by the rebound in occupancy rates which rose 16.3 ppts to 46%, which more than offset the 2.3%-y-o-y decline in average daily rate (ADR) to IDR 1.7 million. Further, the moderating decline in ADR indicates that it may be starting to bottom out.
• Luxury RevPAR in December 2021 was IDR 1.3 million, which marked a monthly high since the start of the COVID-19 pandemic. This was buoyed by the strong rebound in occupancy rates, which not only reached a pandemic high of 68% but was also higher than pre-COVID-19 rates in December 2019.

Outlook: Anticipated reopening to boost performance

• Recovery in trading performance in the near term will likely remain domestic-led, as domestic corporates and staycation guests continue to fuel demand for luxury hotels. However, the gradual reopening of borders in the region is expected to be a major catalyst which will accelerate the recovery.
• On a positive note, Indonesia has recently opened a quarantine-free travel corridor that allows people from Singapore to travel to Batam and Bintan. With Singapore already operating a unilateral vaccinated travel lane (VTL) with Jakarta since November 2021, there is growing optimism that Indonesia will soon open more of such corridors to other key regions such as Jakarta.