Budget Cuts Threaten Indonesia’s Hotel Industry with Mass Layoffs

JAKARTA, investortrust.id – Budget efficiency measures by the Indonesian government are threatening the country's hotel industry, with the prospect of mass layoffs looming. The cutback in government spending has significantly reduced bookings for both room stays and Meetings, Incentives, Conventions, and Exhibitions (MICE), putting hotel operations under serious pressure.

The Indonesian Hotel and Restaurant Association, or PHRI, revealed that 88% of hotel business owners surveyed anticipate initiating layoffs if these policies are not reevaluated within the next six months. PHRI Chairperson Hariyadi Sukamdani said the prolonged downturn in bookings is already forcing hoteliers to slash room rates just to maintain occupancy levels—an unsustainable strategy that could destabilize the market in the long term.

“Unless the government reassesses these policies, hotel operators will be left with no choice but to reduce their workforce significantly in order to survive,” Hariyadi said during a press conference in Jakarta on Saturday, March 22, 2025.

To address the declining demand, the hospitality sector is urging the government to implement tax breaks, offer financial aid, and ramp up tourism promotion. Without such intervention, industry players warn, the sector's performance will continue to deteriorate, potentially leading to structural damage.

Hariyadi emphasized that tourism should be prioritized by the government as a key sector requiring urgent support amid economic headwinds. PHRI hopes authorities will take immediate and concrete actions to secure the long-term sustainability of the hospitality industry.

“We need swift and precise government intervention to prevent permanent damage to this sector,” he said.

Hotels and restaurants industry accounted for 2.64 percent of Indonesia's economy in 2024, growing by 8.56 percent from a year earlier.