Dhini Oktavianti – A survey conducted by the Indonesian Hotel and Restaurant Association (IHRA) and Horwath HTL, involving 726 respondents from 717 hotels in 30 provinces, show as many as 88 per cent contemplating mass layoffs to stay afloat. This highlights the devastating impact of the government's budget cuts, particularly on cities reliant on business events.
The survey revealed that 58 per cent of hotel businesses anticipate potential loan defaults while 48 per cent project unavoidable permanent hotel closures should the situation remains unchecked. Fifty-six per cent of respondents say a 10 to 30 per cent loss in total revenue year-on-year is likely.
The financial strain caused by rising operational costs amid reduced government travel and events will force businesses to consider drastic measures.
Additionally, 78 per cent of surveyed businesses project missed tax revenue targets for the government while 71 per cent anticipate supply chain disruptions that would in turn impact SMEs that rely on the tourism industry. Eighty-three per cent of respondents are also concerned that a slowdown in the tourism sector would severely damage local economies.
The survey stated: "As we move into 2025, there are no signs of the government taking action to address fundamental issues."
Over 50 per cent of respondents expect a challenging year as a result.
Haryadi Sukamdari, chairman, Indonesia Tourism Industry Board, urged the government to revoke the policy.
"(The initial) government plan was to cut 50 per cent of budget, but we are now facing a total cut. (We deem) it crucial for the government to stick to the original budget cut quickly," he said during a media conference.
Hariyadi expressed concern that the government's delayed response could erode public trust and severely impact hotel, aviation, and potentially all related businesses.
The government's activity cuts are already being felt by daily workers in hotels as a result of job losses, he said.
Hotel industry players urge the government to implement concrete solutions, including tax relief, tourism promotion, staff training, financial assistance, and simplified regulations, particularly visa-free policies to attract foreign tourists, to arrest industry losses.
Bayu Sutanto, secretary general of the Indonesia National Air Carrier Association, said the impact has extended to the aviation industry. Indonesian airlines have lost between 12 and 15 per cent of business due to restrictions on official travel.
Bayu said both full-service and budget airlines are being impacted by loss of traffic due to decreasing buying power, but warned that airlines with a larger government clientele, like Garuda Indonesia, could see more severe effects.