hotel intelligence indonesia - jll and jakarta remain the most popular destinations for tourists...

Hotel Intelligence Indonesia

Indonesia Hotel and Tourism Report | May 2015Hotels & Hospitality Group

Contents

03 Market Overview

Jakarta06

Lombok10

04Market Summary

08Bali

Hotel Intelligence Indonesia 3

Market Overview

Tourism Demand Supply OutlookInternational tourist arrivals to

Indonesia numbered approximately 9.5 million during 2014, a growth

of 7.2% year-on-year. The country has seen a CAGR (Compounded Annual Growth Rate) of 7.0% in

international visitation between 2003 and 2014, however, growth has

been affected by security issues in recent years.

Bali and Jakarta remain the most popular destinations for tourists with

3.8 million and 2.3 million foreign tourist arrivals in 2014 respectively.

Lombok is gaining traction with foreign visitors and witnessed close

to 70,000 visitor arrivals in 2014, growing by 41.8% between 2010

and 2014 (CAGR).

Branded new room supply is primarily concentrated in Bali and Jakarta with an additional 19,790

keys expected to enter these two markets in the near future.

Internationally branded supply in Lombok is limited but expected to grow with the proposed Mandalika

Project (an integrated project comprising of hotels, villas, luxury

residences and golf course) in South Lombok breaking grounds.

The Indonesian tourism industry is set to continue to grow for the foreseeable future with

the government aiming for 20 million visitors by 2020. Planned

government investment in infrastructure and additional flight routes are expected to improve the overall connectivity, while

investment in facilities for visitors including new hotels across all star categories, entertainment centers, fine dining restaurants and tourist

attractions should boost the number of visitor arrivals.

Source: WTTC, BPS-Statistics Indonesia, JLLADR - Average daily rate, RevPAR - Revenue per available room

QUICK FACTS

(Bali and Jakarta)

6,292Number of New Rooms in 2014

9.5 millionInternational Visitor Arrivals in 2014

Contribution of Tourism Industry to National GDP

3.1%% of total GDP in 2013

(forecast to rise by 8.1% in 2014)

Source: BPS-Statistics Indonesia / JLL

International Visitor Arrivals to Indonesia

4 Indonesia Hotel and Tourism Report

Indonesia is the fourth most populous nation in the world and sits between the continents of Asia and Australia and between the Pacific and the Indian Ocean. The country is predicted to have 255 million people from more than 200 ethnic groups by the end of 2015.

Indonesia is the largest archipelago in the world comprising of over 17,000 islands. Of these islands the most well-known are Bali, Sumatra, Java, Kalimantan, Sulawesi, Maluku Islands and Papua.

Due to its location and geology, the country is blessed with varied landscapes and nature including green rainforests, numerous volcanoes, pristine beaches and diverse flora and fauna.

Indonesia has a diverse culture that has developed over centuries, having been influenced and adapted along the way with Indian, Arabic, Chinese and European traces. Differences in culture can be seen from region to region in terms of dance, textiles, architecture, cuisine and language.

Indonesia’s leading cities including Jakarta, Surabaya and Bandung, cater to the business and leisure travels. A number of shopping malls, road side stalls and MICE facilities continue to attract visitors.

Accessibility between cities and tourist destinations is facilitated by direct flights, supported by regular and low cost carriers connecting more remote destinations.

-20%

0%

20%

40%

60%

80%

100%

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

10.0

2002 2003

2004 2005

2006 2007

2008 2009

2010 2011

2012 2013

2014

YTD Mar 2014

YTD Mar 2015

Annual Growth (%) Visitor Arrivals (million)

International Visitor Arrivals Annual Growth

Market Summary

In 2014, Indonesia welcomed 9.5 million international visitors, with visitation growing by 7.0% per annum (CAGR) between 2003 and 2014.

Recent Key Transactions


Bali

Lombok

BRUNEI

Kalimantan Sulawesi

Maluku

The Nusa Tenggara Islands

Sumatra

Papua

Java

CAMBODIA VIETNAM

LAOSTHAILAND PHILIPPINES

INDONESIA

BURMA

MALAYSIA

SINGAPORE

Jakarta

AUSTRALIA

EAST TIMOR

PAPUANEW

GUINEA

Property Name Location Year Rooms Price

(USD)Price per

room (USD)Level 8 Urban Hotel Petitenget

Bali 2014 139 20 million 144,000

Somerset Berlian Jakarta 2014 137 9.8

million 71,800

Semara Seminyak Bali 2013 63 20

million 317,400

Bali Nirwana Resort Bali 2013 278 115

million 413,600

Source: JLL

OutlookIn the light of growing visitation coupled with improvement in the overall tourism infrastructure, the outlook for Indonesian hospitality market remains positive. The weakening of the Indonesian Rupiah continues to attract foreign visitors, while domestic tourism also continues to grow.

Although visitor arrivals to Indonesia have been stunted by security issues in the past such as bombing incidents including the one in Bali in 2005 and in Jakarta at the JW Marriott and Ritz-Carlton hotels in 2009, the stabilising of the economic and political situation has provided cautious optimism for investors.

While tourism is expected to remain strong with increased air traffic and visa free initiatives, poor state of infrastructure remains one of the key challenges across Indonesia.


Jakarta

Jakarta is the capital and largest city of Indonesia, predicted to have a population of 10.1 million people in 2015. The city is the country's economic, cultural and political centre. It was originally established in the fourth century and was an important trading port for the Kingdom of Sunda.

Being the national capital, Jakarta acts as the main gateway to Indonesia’s many tourist destinations. In 2014, Jakarta witnessed its highest ever number of visitor arrivals. Although the capital is seldom viewed as a centre for tourism itself, efforts to improve the city’s reputation as a service and tourism city have been stepped-up.

The increase in flight connectivity between Jakarta and major gateway cities will continue to boost visitation. Garuda Indonesia introduced direct flights five times weekly between Jakarta and Amsterdam in May 2014 and London via Amsterdam flights in September 2014 which are expected to become a daily route by the end of 2015. The airline also plans future routes to Paris and Frankfurt, providing greater accessibility for European travellers to Jakarta and beyond. This has led to the introduction of Netherlands as one of the top ten source markets.

In recent years, Jakarta has expanded its facilities for visitors by developing new multi-star luxury hotels, entertainment centres, fine dining restaurants as well as tourist attractions in an effort to boost visitor arrivals. Visitor arrivals have registered an 8.4% annual growth rate (CAGR) between 2003 and 2014, reaching 2.3 million visitors in 2014.

Source: JLL

Hotel Rooms Opening InterContinental Pondok Indah Jakarta 300 2015Sheraton Jakarta Gandaria City Hotel 300 2015Regatta Jakarta 320 2015The Bellagio 290 2016Hotel Indigo Jakarta 110 2016St Regis 124 2016Rosewood Jakarta 200 2017The Langham Jakarta 200 2017Waldorf Astoria 181 2018W Hotel Ciputra World II 250 2018

Source BPS-Statistics Indonesia / JLL


Outlook

• As of year-end 2014, Malaysia, Jakarta’s largest source market, continued to record a 1.3% y-o-y growth motivated by its close proximity and the facilitation of low cost carrier flight connectivity between four Malaysian cities and Jakarta.

• The development of Shari’ah tourism has also supported the increase in tourists from Middle Eastern countries, with Saudi Arabia registering a 26.2% y-o-y increase in 2014.

• Jakarta has witnessed significant supply additions in the recent past, putting pressure on hotel trading performance.

• Investment in infrastructure including expansion of Soekarno–Hatta Airport will boost the city's capacity to handle greater demand and thereby support tourism and corporate demand.

Key Hotel Openings

Source: STR Global / JLL

Trading Performance – Jakarta Upscale

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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$50

$100

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2006 2007

2008 2009

2010 2011

2012 2013

2014

YTD March 2014

YTD March 2015

Occupancy (%) ADR/RevPAR (USD)

ADR (USD) RevPAR (USD) Occupancy

Trading Performance

• Trading performance in 2014 was down over the previous year, with RevPAR declining 4.7% relative to 2013 to USD 115 driven by a simultaneous decline in occupancy from 65.9% to 63.7% and average room rates from USD 184 in 2013 to USD 181 in 2014.

• Figures for YTD March 2015 indicate a decline in RevPAR performance of 6.8% y-o-y to USD 109 compared to the same period in 2014.

International Visitor Arrivals to Jakarta

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YTD Mar 2014

YTD Mar 2015



Demand

• Jakarta is the most populous city in Indonesia and is country's economic, cultural and political centre.

• Being an international gateway to the rest of the country, it welcomed 2.3 million foreign visitors during 2014, up 0.3% over the previous year.

• Malaysia, Mainland China, Japan, Singapore and Saudi Arabia are the top source markets to Jakarta.

Key Recent Additions

• Holiday Inn Express Jakarta Pluit Citigate, 297 keys;

• Ibis Styles Jakarta Airport, 251 keys;

• Mercure Jakarta Sabang, 166 keys;

• Fairmont Jakarta, 380 keys;

• Raffles Jakarta, 173 keys.


Bali

Bali is known as the island of the gods and is the largest tourist destination in the country. The island is famous for its art galleries, local traditions, culture and nightlife as well as natural wonders including a large number of sandy beaches, rugged coastlines, lush rice terraces and barren volcanic hillsides.

Bali had an estimated population of 4.1 million people in 2014. Around 85% of the population adhere to Balinese Hinduism which can be seen through its influence of the art and culture of the island.

In 2014, Bali welcomed 3.8 million tourists. Visitation grew by 12.9% per annum (CAGR) between 2003 and 2014. Despite the rapid growth of tourism and development, the Balinese tradition, culture and lifestyle is still what it was and continues to make the island stand out from other destinations.

Historically, much of the development has been focused in South Bali (Seminyak, Legian and Kuta as well as quieter, higher-end destinations such as Sanur and Nusa Dua). Further north, the town of Ubud is recognized as the spiritual home of Balinese culture. Yet, outside these main tourist areas, the island remains largely untouched, providing scope for development.

Bali is benefiting from increased domestic and international visitor arrivals thanks to continuously improving infrastructure and affordable air connectivity. A host of new air routes linking the island to Mainland China and the Middle East together with visa free entry proposed to nationals from 30 countries including Japan, UK, USA, South Korea, Mainland China and Russia shows the government’s desire to grow new markets beyond Bali’s traditional base of Australian tourists, which constituted 25% of international arrivals in 2014. As of date, nationals of 15 countries are eligible for a 30-days visa free entry to Indonesia.

Infrastructure has improved significantly in recent years with major achievements including the refurbishment of the international airport and the construction of the Bali Mandara toll road, linking Kuta with Nusa Dua.

Construction of a new international airport at Buleleng Regency in the north of the island has been planned by the authorities. Approval has also been granted for improvement of roads linking South Bali and the capital Denpasar to East, West and North Bali. These moves have been seen as the most essential requirement to harness the untapped potential for development in the remote areas of the island.

Although improvements in air and road connectivity are progressing, occasional water and electricity shortages remain a challenge.


Source: JLL

Hotel Rooms Opening Hilton Garden Inn Ngurah Rai Airport 292 2015Hotel Indigo Seminyak 280 2015Kempinski Nusa Dua 480 2015Westin Ubud Resort & Spa 107 2016Andaz Bali 144 2016Jumeirah Bali 120 2016Mövenpick Resort 270 2016Mandarin Oriental Bali 121 2016Six Senses Bali 97 2017Shangri-La Nusa Dua 249 2017Fairmont Uluwatu 170 2017Ritz-Carlton Reserve 100 2017Waldorf Astoria 96 2017Conrad Ubud Resort 80 2017Raffles Uluwatu 80 2017

Key Hotel Openings Outlook

• New air routes and initiatives such as extension of visa free entry to citizens of 30 countries, are anticipated to boost tourist inflow.

• Construction of a new airport in the north has been approved which may allow potential development in remote and untapped areas of the island in the future.

• Significant supply pipeline is expected to put pressure on the hotel market performance in the near term. However, in the longer term, we expect the incremental supply to be absorbed with growing demand.

Key Recent Additions

• Ritz-Carlton Bali, 313 keys;

• Double-Six Seminyak, 146 keys;

• Mercure Bali Legian, 321 keys.

Source: Bali Provincial Government / JLL

International Visitor Arrivals to Bali

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0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

2002 2003

2004 2005

2006 2007

2008 2009

2010 2011

2012 2013

2014

YTD Mar 2014

YTD Mar 2015



Source: STR Global / JLL

Trading Performance – Bali Upscale

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

$0

$50

$100

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$200

2006 2007

2008 2009

2010 2011

2012 2013

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YTD March 2014

YTD March 2015

Occupancy (%) ADR/RevPAR (USD)

ADR (USD) RevPAR (USD) Occupancy

Demand

• Bali is the leading tourist destination in the country, famous for its art, culture, nightlife and scenic beaches.

• In 2014, Bali welcomed 3.8 million foreign tourists, an increase of 14.9% on 2013.

• Top source markets to Bali include Australia, Mainland China, Japan, Malaysia and South Korea.

Trading Performance

• RevPAR increased by 2.3% year-on-year during 2014 to USD 117, primarily driven by an increase in occupancy to 72.4%. While ADR declined 4.7% to USD 162 during the same period.

• Figures for YTD March 2015 represent a 10.7% decrease in RevPAR to USD 90 compared to USD 101 in 2014, which is driven by both a decline in ADR as well as occupancy.


Lombok

Lombok is a tropical island in the West Nusa Tenggara province of Indonesia. The city of Mataram is the largest city and provincial capital located on the island. Situated on the east of Bali, Lombok offers natural landscapes, a traditional way of life and a diverse flora and fauna that have helped in capturing growing attention of a number of domestic and international visitors.

Accessibility to Lombok Island is primarily through Lombok International Airport, though busses and ferries are also available to allow tourists to reach the island via Jakarta and Surabaya.

Attractions on the Lombok Island include Lombok beach, Senggigi beach, Marmada Park and Mount Rinjani, the second highest volcano in Indonesia. Moreover, the island is also famous for its great diving, trekking and surfing locations.

The Bali Tourism Development Corporation (BTDC) in conjunction with the Indonesian Government, have proposed a unique project named Mandalika in south Lombok. The proposed integrated project will be built on a 1,053 hectare plot of land and will comprise luxury residences, exclusive villas, hotels and a golf course. The construction of hotels is expected to start by August 2015, while basic infrastructure development has already commenced. Slated to be fully complete by 2021, the proposed mega project will certainly provide fillip to the tourism industry in Lombok.


Source BPS-Statistics Indonesia / JLL

International Visitor Arrivals to Lombok

Demand

• The total number of visitors to Lombok via Lombok International airport reached 69,000 in 2014.

• Visitor arrivals have grown at a rate of 41.8% annually (CAGR) between 2010 and 2014.

• Key tourist attractions in the region include Lombok beach, Senggigi beach, Marmada Park and Mount Rinjani.

• The island is famous for its great diving, trekking and surfing locations.

• Lombok appears fifth on TripAdvisor's 2015 Travellers' Choice list of the top 10 islands in Asia.

International Visitor Arrivals

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01020304050607080

2010 2011

2012 2013

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YTD Mar 2014

YTD Mar 2015

Annual Growth (%) Visitor Arrivals (’000)

Annual Growth

Front cover Borobudur, YogyakartaAbout JLL JLL’s Hotels & Hospitality Group serves as the hospitality industry’s global leader in real estate services for luxury, upscale, select service and budget hotels; timeshare and fractional ownership properties; convention centers; mixed-use developments and other hospitality properties. The firm’s more than 320 dedicated hotel and hospitality experts partner with investors and owner/operators around the globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than any other hotels and hospitality real estate advisor in the world totaling more than US $48 billion, while also completing approximately 4,500 advisory, valuation and asset management assignments. The group’s hotels and hospitality specialists provide independent and expert advice to clients, backed by industry-leading research.For more news, videos and research from JLL’s Hotels & Hospitality Group, please visit: www.jll.com/hospitality, download the Hotels & Hospitality Group app for iOS and Android, or view our e-magazine The Hotel Investor, available for iPad.

Supply

• Internationally branded supply in Lombok is limited but growing. Key players in the market include Sheraton, Novotel and The Oberoi branded resorts.

Outlook

• Bali Tourism Development Corporation (BTDC) has started work on the Mandalika project in South Lombok. With an aim to provide a suitable resort infrastructure, the proposed project will consist of luxury residences, hotels, golf course, museum and MICE facilities. The project is expected to be completed in three phases by 2021.

• Although Tigerair and Jetstar no longer operate services from Singapore and Perth to Lombok, AirAsia has increased service from 7 to 10 weekly flights as it anticipates increase in demand to the island.

www.jll.com/hospitality

Jones Lang LaSalle Property Consultants Pte Ltd | CEA Licence No. L3007326E© 2015 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

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Corinna Toh Executive Vice President Strategic Advisory, Asia [email protected] +65 6438 3898

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