President Prabowo Subianto’s ambitious goal to achieve budget efficiency of USD 44 billion, equivalent to IDR 750 trillion, in his first year is making waves across Indonesia’s economy. The impact is particularly felt in the hospitality industry, where hotels are grappling with a sudden drop in government event bookings. How deep is this impact, and what does it mean for the future of the hotel business?
In Batu City, hotel operators are already feeling the pinch. Many hotels are experiencing a wave of cancellations for government events, a revenue stream they once heavily relied on.
Aston Inn Hotel, located on Jalan Abdul Gani Atas V in Batu City, is among the hardest hit. Known for hosting numerous government events, this 4-star hotel is now facing reservation cancellations stretching several months ahead.
“The impact is already being felt. Events from ministries, provincial governments, and city/regency governments have been canceled for up to four months ahead,” said Aston Inn’s General Manager, Rocki, on Saturday (February 15, 2025), as quoted by Travel Detik.
He further explained the severity of the situation. “From the government offices we visited, most of them mentioned that activities which usually involve five to six events per department each year have been reduced to only one or two urgent events due to budget efficiency.”
This wave of cancellations is not merely an inconvenience. It has dealt a significant blow to Aston Inn’s finances. According to Rocki, more than 50% of the hotel’s income is generated from government events, money that is crucial for operational expenses.
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“We deeply regret these cancellations because more than 70% of the revenue from government events is circulated for operational costs, including employee salaries, taxes, suppliers, local SMEs, and more,” Rocki stated.
With government event cancellations on the rise, Aston Inn is now seeking alternative sources of income. The hotel is exploring new revenue streams from social events, private corporate gatherings, and group bookings through travel agencies.
Hotel Samara, located on Jalan Imam Bonjol in Batu City, faces a similar predicament. Its General Manager, Arif, confirmed that the budget efficiency policy has significantly impacted their business.
“With this budget efficiency policy, the impact is very noticeable. In the next two months, two government events have already been canceled,” he said.
This trend isn’t limited to just a few hotels. According to Sujud Hariadi, Chairman of the Indonesian Hotel and Restaurant Association (PHRI) in Batu City, numerous hotels are experiencing cancellations of government-related events.
Sujud predicted that hotels in Batu City could lose between 20% to 50% of their revenue from government-related events, including meetings, incentives, conventions, and exhibitions (MICE).
As budget efficiency measures continue to unfold, the hospitality industry in Batu City faces a challenging road ahead. Hotels are now tasked with diversifying their income streams and reducing their reliance on government events. The question remains: can they adapt quickly enough to weather this financial storm?
