Jakarta’s hospitality sector is facing serious pressure, with potential mass layoffs looming, according to a recent survey by the Indonesian Hotel and Restaurant Association (PHRI) Jakarta chapter.
The survey, conducted in April, found that 90% of hospitality businesses have already laid off daily workers, while 36.7% have trimmed permanent staff. The majority of businesses foresee reducing their workforce by 10% to 30%.
Sutrisno Iwantono, chairman of PHRI Jakarta, attributed the downturn to a combination of plummeting hotel occupancy and rising operational costs. “The imbalance in market structure indicates the urgent need for better tourism promotion strategies and more effective policies to reach international audiences,” he said.
Government policy impact
The key culprit is a sharp drop in government-funded hotel stays, following President Prabowo Subianto’s 2025 budget efficiency policy. Enacted through Presidential Instruction No. 1 of 2025, the policy targets savings of Rp 306.6 trillion and has led to sweeping cuts in official travel, meetings, and seminars.
Traditionally, the government segment has been a major driver of hotel bookings. But 66.7% of respondents said this market experienced the most significant decline in Q1 2025. Overall, 96.7% of Jakarta hotels reported lower occupancy during the period.
Colliers Indonesia echoed this sentiment. “Hotels that were just beginning to recover post-pandemic are now slowing down again due to the decline in government spending,” said Ferry Salanto, senior associate director at Colliers Indonesia. “Without relaxation or stimulus from the government, the hotel market will have to rely heavily on the non-government sector.”
Statistics Indonesia data showed that international visitors to Jakarta made up just 1.98% of total arrivals between 2019 and 2023, further highlighting the city’s reliance on domestic and government markets.
MICE industry on the ropes
The MICE sector is suffering as well. A separate survey by the Indonesia Event Industry Council’s Bali chapter (DPD IVENDO) found around 2,500 workers in Bali’s event and MICE industry are at risk of layoffs due to the same budget cuts.
In regions such as South Sumatra, occupancy fell from 90% to 55% following the near disappearance of government MICE activities. Similar declines have been seen in Yogyakarta, Balikpapan and West Java.
The Secretary General of PHRI, Maulana Yusran, warned that government business travel contributes between 40% and 60% of hotel revenue. “National hotel occupancy has dropped to 20%, far below last year’s average of 50% to 60%. Nearly all regions are affected, especially hotels that rely heavily on MICE,” he said.
Call for government support
To mitigate the crisis, PHRI Jakarta is urging the government to ease restrictions on official travel and meetings. It also recommends a review of water tariffs, industrial gas prices, and sectoral minimum wages, along with a push for more efficient and transparent licensing and certification processes.
While cost-cutting continues at the top, many in the hospitality sector are bracing for the worst, with hopes pinned on policy change to prevent widespread job losses.