International hotel operators boost Medan's stature
Monday, April 26, 2010
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As more international hotel chains have opened in Medan over the past two years, North Sumatra should benefit from its wider international exposure to potential foreign tourists and investors through world-wide promotion.
But as more international hotel operators entered the top-end market in the N. Sumatra provincial capital while the global economy was weakening since late 2008, a price war seemed inevitable within the 5-star property range.
The 234-room Grand Angkasa virtually dominated the top-end hotel market until 2007. But three more 5-star properties — The Ar-yaduta, Grand Swiss-Belhotel and JW Marriott — came on stream in the country's third largest city in 2008, followed by the Grand Aston Cityhall in January.
"Even the 287-room Marriott, which opened in late 2008 with a big bang and tried to stand out of its class eventually joined the price war that was triggered by the sudden supply of so many rooms," Grand Swiss-Belhotel's public relations manager Lisa Ngadio told The Jakarta Post in Medan.
However, Djodi Trisusanto, vice president of Jones Lang LaSalle Hotels property consulting company in Jakarta, is still upbeat about the market for upscale hotels in Medan.
Trisusanto noted Medan is the main gateway to Sumatra and close to Malaysia and Singapore. Commodity prices are recovering along with stronger economic growth and a new modern international airport is under construction near the city.
These factors will make Medan, a favorite destination for long-haul tourists and a popular venue for domestic business meetings, exhibitions, conventions and incentive tours, he said.
"We should also remember that Medan is the fifth largest destination for foreign tourists with 150,000 arrivals last year or up 14 percent from 2008, despite the sluggish international economy," Trisusanto added.
He also pointed to another demand-generator for hotels in Medan — Lake Toba, the world's largest volcanic lake — if adequately promoted, could woo more foreign tourists.
Colliers International property analyst Ferry Salanto estimated there were about 3,635 hotel rooms in the 3 to 5-star bracket in Medan as of early this year, of which the top quality category accounted for 25 percent.
"There will still be an additional supply of rooms in the non-star rated and three-star category within the next three years. But I don't think there would be any more new properties in the 4 and 5-star category coming on stream until 2012," Salanto observed.
Ricky Theodores, the general manager of the 205-room Grand Aston Cityhall, said the top-end hotel market still depends largely on domestic business travelers.
"More than 60 percent of our guests are domestic business travelers. Only about 25 percent consist of foreign travelers [leisure and business]," Theodores told the Post in Medan.
Lisa Ngadio concurred that the main drivers of the 4 and 5-star hotel market are domestic and foreign business travelers with the latter group coming mainly from Singapore and Malaysia.
"We cannot expect a significant number of upscale foreign tourists within the near future if local operators cannot come up with more attractive package programs. Moreover, most infrastructure that caters to foreign travelers is still inadequate," Lisa added.
Theodores was nevertheless quite bullish about the prospects for the hotel market in view of the strong economic recovery expected this year and the role of Medan as the growth hub for North Sumatra and the Aceh economy.
He attributed his bullish sentiment to the business-friendly attitude of the Medan administration which has increasingly been aware of the important role of the travel industry as a major source of income.
"I expect an average occupancy rate performance of 70 percent this year, up significantly from 50-60 percent last year because economic growth is synonymous with business growth," Theodores added.
JW Marriot's public relations manager Handajani Susilaning Rahayu shared Theodores' optimism, saying the market would continue to grow as the local economy continued to expand.
Moreover, as more international hotel operators enter Medan, they will contribute to promoting the travel industry in the city and N. Sumatra in general through their world-wide networks, she told the Post in Medan.
"With more international hotels entering the market, they will help bolster the potential of Medan through additional promotion and publicity via their global networks," Handajani added.
Theodores added that if each of the international operators will come up with innovative ideas to help win a greater market share then this will further contribute to Medan's development.
Vincent Lingga, The Jakarta Post, Medan
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Judul: International hotel operators boost Medan's stature
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