Cirebon, West Java. Hotels in Cirebon, West Java, could face mass layoffs within months as plummeting occupancy rates, driven by government budget cuts, continue to batter the hospitality sector, local industry leaders warned Thursday.

Imam Reza Hakiki, chairman of the Indonesian Hotel and Restaurant Association (PHRI) in Cirebon, said hotel businesses in the city and surrounding regency are running on borrowed time, with some likely to exhaust their financial reserves within three to four months. Internal cost-cutting measures, including not renewing staff contracts and reducing part-time labor, are already underway.

“If there’s no significant change, mass layoffs are almost inevitable,” said Hakiki. “Hotels are barely breathing at this point.”The downturn is largely attributed to the central government’s aggressive austerity push, which has slashed travel and event budgets across ministries and agencies. These bookings, often tied to meetings, incentives, conventions, and exhibitions (MICE), traditionally account for a substantial portion of hotel revenues.

According to the Cirebon Statistics Agency office, as of 2023, the hospitality sector in Cirebon comprises a total of 43 accommodation establishments, including seven star-rated hotels and 36 non-star-rated hotels. While specific data on the number of hotel workers in Cirebon is not readily available, regional estimates suggest that each hotel and restaurant in West Java typically employs between 100 to 300 individuals.According to PHRI Secretary-General Maulana Yusran, government clients contribute 40–60 percent of income for most hotels, with some properties depending on them for up to 80 percent of total revenue.

“The drop started early this year, and by mid-April, we still haven’t seen any government bookings, not even tentative ones,” Hakiki said, highlighting the unusual absence of public sector activity during what is typically a moderately active period.

This year’s Eid al-Fitr holidays, normally a peak period for domestic travel, failed to deliver a meaningful boost. Many hotels across the region reported lower-than-expected occupancy, a further sign that even seasonal surges may no longer offer a lifeline.

Nationwide, the hotel occupancy rate dropped to just 20 percent last month, down from 40–60 percent in the same period last year, according to PHRI estimates. Data from Indonesia’s Central Statistics Agency (BPS) showed occupancy in January–February 2025 averaged just 37.77 percent, a slight year-on-year decline but far below sustainability levels for many operators.

In Cirebon, hotels reported January–February occupancy at just 50–60 percent, already low due to the typical post-holiday dip, but worse than in prior years. Even major cities like Bogor and Bandung are reportedly experiencing steeper declines.

To mitigate long-term risks, Hakiki urged the government and stakeholders to accelerate the development of Cirebon’s tourism potential. The city, known for its cultural heritage and religious tourism, must diversify its appeal beyond business and government travel, he said.

“If we don’t invest seriously in cultural and religious tourism, like promoting the royal palaces and traditional landmarks, the hotel industry won’t have much left to fall back on,” Hakiki said.

President Prabowo Subianto's administration has pledged to cut over Rp 300 trillion in spending as part of a national efficiency drive, tightening travel and event budgets for civil servants and state institutions, a blow to the hospitality sector's most dependable clientele.