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Indonesia at the forefront of Asian hotel construction

Indonesia’s capital Jakarta has more hotel rooms under construction than any Asia Pacific city except Shanghai, a report from STR Global has revealed. Tourism hub Bali is also in the top five cities for new accommodation.

The Global Construction Pipeline Report shows that Jakarta has 6,743 rooms being built, while developers in Bali are currently working on 5,613 rooms, putting the city in fourth place in the region. The other cities to make the Asia Pacific top five were leader Shanghai, Chengdu in China, and Delhi in India.

Tourism in Indonesia has been growing steadily for several years, and 2014 continued the trend with 9.5 million tourist arrivals, 7.2% up on 2013. While tourist arrivals in January 2015 were 4% down on the start of last year, this was mainly due to the timing of Chinese New Year (which fell in January in 2014 but in February this year). According to Indonesia Investments, analysts expect February’s figures to make up for the decline.

Bali is the main destination for foreign tourists in Indonesia. Its airport welcomed 3.76 million visitors in 2014, an increase of nearly 15%, which is boosting the area’s economic growth. Bank Indonesia expects Bali’s economy to grow by up to 6.5% in 2015, driven by more tourists, increased construction spending, and improvement in the investment climate.

Jakarta’s tourism potential is also growing – 2.2 million tourists touched down at the capital’s Soekarno-Hatta airport last year, and this means that hotels are playing a big part in the city’s building boom. Hotel projects underway in Jakarta include a 74-story Waldorf Astoria that will be the city’s tallest hotel when it opens, the St. Regis Hotel as part of a 141,000 sqm mixed-use development, and a proposed five-star hotel built by the Hyatt Group in the Plaza Indonesia Jababeka township project.

It is an excellent time to be involved in hotel building in Indonesia. The number of hotels is growing at a rate of between 9% and 14% each year, a pace not seen since the 1990s, and foreign investment in the sector grew nearly 10% in 2014, with the Swiss chain Belhotel planning up to 20 new projects in the archipelago. Indonesia’s government wants to attract 20 million tourists by 2019 – so this hotel construction surge is unlikely to slow down anytime soon. 

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