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Batam hotels halt operations as COVID-19 hits tourism hard

Jakarta Post - March 30, 2020
Fadli, Jakarta – At least nine hotels in Batam, Riau Islands, are suspending operations at the end March amid a lack of visitors following lockdowns imposed in major tourism markets, such as Singapore and Malaysia.

The chairman of the Batam chapter of the Indonesian Hotel and Restaurant Association (PHRI), Muhammad Mansur, said the closure was temporary for some of the hotels, while others had permanently closed their doors.

The hotels were forced to suspend operations because occupancy rates had fallen below 5 percent since the virus became widespread in early February, far below the ideal 70 to 80 percent for four-star hotels, Mansur told The Jakarta Post on March 23.

He estimated that more hotels were likely to follow suit as business prospects in the tourist industry in the province of Riau Islands, especially on the island of Batam, were worsening.

The hotel closures reflect the blow that the coronavirus pandemic has dealt to the hotel industry, with occupancy rates well below the seasonal average. The PHRI previously announced that, according to its estimate, occupancy rates across Indonesia had fallen to as low as 20 percent.

According to Statistics Indonesia (BPS), the occupancy of star-rated hotels in Indonesia stood at 49.17 percent in January, down slightly from 51.47 percent in the corresponding month last year. BPS usually announces February's tourism data in early April.

Mansur said the local hotel industry had begun to feel the COVID-19 impact since early February, and business had worsened by the middle of March after Singapore and Malaysia imposed lockdowns. The two countries make up a large portion of foreign tourists in Batam.

The Indonesian government has attempted to cushion the blow with financial support for 10 tourist destinations, including Batam, by not collecting hotel and restaurant taxes for six months as part of a US$742 million financial incentive package rolled out in February. In return, the government will give regional authorities Rp 3.3 trillion to compensate for forgone tax revenue.

But Mansur said the government's tax breaks had failed to keep Batam's hotel industry afloat. "There is no use at all even [when cutting taxes to zero] if there are no visitors," said Mansur.

The PHRI estimates that more than 1,000 employees have been dismissed due to the closure of the nine hotels, and it expects the number of dismissals to increase if the pandemic persists over the next few months.

The association's another executive Bambang Surya added that the managers of various hotels were planning to put employees on unpaid leave starting in April, based on discussions with its 30 members, which are star-rated hotels in Batam.

"Seeing current developments, the situation will probably continue until June. If it goes on beyond July, I don't know how hotels will [cope] with the revenue [decline], as there are no tourists," Bambang said.

One hotel that has temporarily closed its doors is the four-star Swiss-Belholtel Harbour Bay-Batam, which has halted operations from March 25 to April 30, according to a notice pasted on its main gate seen by the Post. The hotel's general manager, Willy Suderes, said his team would strive to halt the virus spread, as the comfort and security of guests was its main concern.

"We are very concerned about the current situation, and we hope the situation improves soon," Willy said.

Meanwhile, a hotel worker who requested anonymity said he had been asked to stay at home since early March with a monthly salary of Rp 3 million, without the extra Rp 4 million he usually gets in service charges.

He said he would strive for extra income, as the salary would not be enough for his family and for paying off a loan for his motorcycle.

"Now, the hotel depends on local tourists with substandard rates. One or two have come, possibly to experience our hotel's luxury, but with those tourists the hotel will be unable to survive," he said.

The hotel industry is not the only sector in Batam that is suffering from the pandemic's impact. Other businesses, such as shopping malls like the Mega Mall Batam Centre, are a lot quieter than usual.

Unless conditions improve within a month or two, ferry operators on the island are also likely to lay off some of their roughly 1,000 workers as they reduce the number of trips in response to low demand.

"Normally, a ferryboat carries at least 50 people per trip; now it's only 20 people," Asmadi, chairman of the Indonesian National Shipowners Association (INSA) in Batam, told the Post. "All ferry operators are reducing their trips. Operational costs are high, while passenger numbers have dropped drastically." (mai)

Source: https://www.thejakartapost.com/news/2020/03/30/batam-hotels-halt-operations-as-covid-19-hits-tourism-hard.html