Louvre Hotels Group has announced plans to open up to 30 hotels in Indonesia over the next three years.
Indonesia is one of the MINT group of countries tipped for growth, with all eyes currently on the outcome of the July presidential election and the likelihood of economic reforms.
Louvre said that it would open the planned hotels under the Golden Tulip and Premiere Classe brands, having entered the market in 2012 with the Golden Tulip brand. It currently has two hotels open in the country, with a further six due to open this year.
Louvre Hotels Group CEO, Pierre-Frederic Roulot, said: “The strong economy and solid long-term outlook will fuel greater business opportunities and travel in the country will become greater. The increase of access through fast developing airline infrastructure means the movement of people for business and leisure has never been greater and in this we see a great opportunity to establish partnerships to manage high quality hotels throughout the country.”
Louvre is not alone is identifying the country for growth. Last month saw Starwood Hotels & Resorts announce that it was debuting its Four Points by Sheraton brand next year, in Makassar. “As Southeast Asia’s largest economy and the world’s fourth most populous country, Indonesia is one of the fastest growth markets for Starwood, and we look forward to opening our first hotel in the capital of South Sulawesi province,” said Chuck Abbott, Starwood’s regional vice president for Southeast Asia. “Four Points Makassar will provide a foothold for Starwood’s continued growth on this island.”
The company currently operates 14 properties in Indonesia under six of its nine brands, and has 10 properties in the pipeline.
Indonesia is part of the planned 10-member Association of Southeast Asian Nations (Asean).
The Asean Economic Community will integrate a region of 600 million people with a combined GDP of USD2 trillion when it launches in December 2015. According to the OECD, ASEAN economies are tipped to grow more than 5% over the next five years, with Indonesia leading the way at more than 6% growth.
Leadership will be a big part of that and, in Indonesia, official campaigning in the country’s presidential election started in 4 June, ahead of the 9 July vote. Unlike the issues currently affecting neighbouring Thailand, the politicking was going peacefully at the time of going to press. Both candidates issued a joint statement promising “an election that is peaceful and with integrity in order to create the growth of Indonesia and to maintain the unity of Indonesia”.
The election will mean a change of president after 10 years and it is hoped that a new incumbent will also mean economic reforms to help the country fulfill its promise, even as slowing growth in China is likely to have an impact. Observers and investors are hoping to see improvements to infrastructure, as well as measures to cut corruption and bureaucracy, making it easier for foreign investors to enter the country.
Joko Widodo, known as Jokowi, the governor of Jakarta, is tipped to win and has promised to end fuel subsidies and channel the money instead to the poor and into infrastructure, as well as enacting bureaucratic reforms to attract investment. If elected, he has promised to issue at least four presidential decrees on bureaucratic reform within his first 100 days in office.
His rival, Prabowo Subianto, is also proposing subsidy cuts, but his military background and nationalist approach to economic policies had raised concerns that he could be protectionist in power. Then, late last month, he announced that he had chosen chief economic minister Hatta Rajasa as his running mate, a man with a reputation as a safe pair of hands. July will tell.
HA Perspective [Chris Bown]: So long as it is a good-natured political fight, then Indonesia’s new president should be in charge of an economy set fair to benefit from growing visitor numbers. Commentators suggest the incoming head should also be in a better position to open up foreign investment, than his predecessor.
Foreign direct investment in the country has been strong, but the World Bank recently warned that it looks to be plateauing. State spending this year will be up 6.7% on last year, specifically supporting infrastructure projects, while inflation is set to fall in the second half.
Hotel groups are gathering, and alongside Louvre and Starwood is Whitbread, whose chief executive Andy Harrison recently pronounced himself “excited about south east Asia and particularly Indonesia”. There are 12 Premier Inns committed in the pipeline in south east Asia, with a further nine agreements signed.