suRAbAyA | 4Q 2010 | THE KNOWLEDGE | HOTEL SECTOR

Surabaya Hotel
sUPPlY
During 2010, there were no new hotels in Surabaya introduced to the market, but the market is expected to have more hotel rooms in 2011, particularly in the 3-star and 5-star category. As at the end of 2010, total hotel rooms in Surabaya hovered at around 4,972 rooms; this is expected to grow to 5,576 rooms in 2011. Several hotel operators have indicated their expansion plans in Surabaya, including Accor group with their Ibis line. The Ibis hotel will be located in the heart of the city at Jalan Basuki Rahmat, and is expected to open in late 2012 with 180 rooms. Tazia management will also introduce their budget hotel line, pop Harris, in 2011. Likewise, Aston International is also planning to release their budget hotel under the Favehotel brand, which will open in Surabaya together with their other brand, Hotel Quest. Hotel Quest will be located in Jalan Rangga Lawe and will be completed at the end of 2012. The budget class hotel market will further continue to grow with the plan from Intiland Group, a local hotel developer, to introduce the Whiz brand in Hayam Wuruk Surabaya. The Santika hotel group will operate the Santika hotel in Jemursari in mid-2011 and the Amaris hotel in Jalan Embong malang. In terms of the number of foreign tourists coming to Surabaya, the figure was up from 158,076 in 2009 to 168,888 in 2010. The tourist profile was dominated by malaysian and Singaporean arrivals. The length of stay (LoS) for star-rated hotels in Surabaya was registered at 2.27 days for foreign guests and 1.48 for domestic guests. In the 3-star and 4-star category, the longest LoS was recorded by foreign guests at 2.72 and 2.53 days respectively, while the longest LoS for 5-star category was recorded by domestic guests at 2.20 days.
sUrabaYa hotel sUPPlY bY total rooms
5-star 31%

bY total Projects

3-star 43%

3-star 61%

4-star 26%

5-star 18%

4-star 21%

Colliers International Indonesia - Research

cUmUlative hotel rooms sUPPlY in sUrabaYa

2,500 2,000 1,500 1,000 500 0 2005 2006 3-star 2007 4-star 2008 5-star
Colliers International Indonesia - Research

2009

2010

sUrabaYa hotel sUPPlY based on location

12 10 8 6 4 2 0 Central Surabaya West Surabaya 3-star East Surabaya 4-star North Surabaya 5-star
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South Surabaya

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suRAbAyA | 4Q 2010 | THE KNOWLEDGE | HOTEL SECTOR

Performance of 3-, 4- and 5-star hotel in sUrabaYa average occUPancY rates (aor)
The overall occupancy for hotels in Surabaya was somewhat stable, particularly for 3-star hotels, which hovered at around 69% year-onyear (YoY). Similarly, the occupancy for 4-star hotels was also relatively stable, moving upward slightly from 71.7% in 2009 to 72.2% in 2010. However, the quarter-on-quarter (QoQ) change was quite significant, rising from 67.2% in 3Q 2010 to 72.9 by year-end. In the 5-star category, occupancy was recorded at 57.8% in 2009, edging higher in 2010 to 61.9%. During 2010, the second quarter was the period where occupancy achieved the highest rates. For example, in the 3-star category, average occupancy rates was recorded at 76.5%, while in the 4-star category, AoR was registered at 77.9%. However, AoR in the 5-star category in 2Q 2010 was lower than what was achieved in 4Q 2010. During 2010, several 3-star hotels achieved high occupancy, i.e. Santika, Ibis and Surabaya plaza. June and July were the months with the highest occupancy for 3-star hotels. may and July were months with the highest occupancy for 4-star hotels. The 4-star mercure Hotel was the best performer last year and this year, followed by Novotel. The mercure Hotel is benefiting from its strategic location and good access, which made it the preferred location for walk-in guests in Surabaya. Likewise, the 5-star Sheraton Hotel recorded a high occupancy rate, the result of its strategic downtown location. June and July was the years peak period for 5-star hotel performance. In summary, may to July 2010 was the period where occupancy rates were high.
average occUPancY rates
100% 80% 60% 40% 20% 0% 2007 2008 3 star

average room rates (arr)

Unlike the positive AoR trend, the overall ARR was somewhat down YoY from 2009 to 2010. This is primarily obvious in the 5-star category, where ARR was recorded at Rp655,312 in 2009 but declined to only Rp555,403 in 2010. Similarly, albeit not significantly, a downward trend was also seen in the ARR for 4-star category hotels, from Rp358,895 in 2009 to Rp328,320 in 2010. In the 3-star category, ARR also was also down, from Rp338,752 in 2009 to Rp324,499 in 2010. Among hotels with high ARR in the 3-star category were Tunjungan Hotel, Elmi and Surabaya plaza. High ARR in this hotel category was generally achieved in January and December 2010. In the 4-star category, the ARR is generally the same, with mercure achieving the highest ARR. In the 5-star category, Shangri-La continued to capture the highest ARR, followed by Sheraton.

While occupancy rates were generally up in 2010, the average room rates were down. During 2010, hotel room demand was generally generated from mICE guests, and the number of walk-in guests was limited. As the main destination area in the east of Indonesia, Surabaya offers room rates below Bali and Jakarta, and this made the mICE market active during the year. Group guests generally came from the government area such as the ministry of Education, and corporations from areas outside Surabaya. With the domination of group guests, room rates was down because group tariffs cannot be as high as walk-in tariffs, and this resulted in the overall ARR for 2010 being down compared to that achieved in 2009. The key to accelerate the hotel business in Surabaya is to provide convention halls with a minimum capacity of between 300 and 400 people. This is necessary to support the growing mICE market in Surabaya. Hotels in Surabaya cannot only rely on walk-in guests to win the market.

average room rates

Rp800,000 Rp700,000 Rp600,000 Rp500,000 Rp400,000 Rp300,000 Rp200,000 Rp100,000 Rp0 2007 2008 3 star 4 star 2009 5 star
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2010

2009 4 star 5 star

2010

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