Jakarta. The Indonesian Hotel and Restaurant Association (PHRI) on Wednesday blamed the government’s ongoing austerity measures for the declining occupancy rates that have plagued the hospitality sector since the beginning of the year.

PHRI Secretary-General Maulana Yusran said that many hotels rely heavily on bookings from government institutions, which contribute between 40 to 60 percent of total revenue for most establishments.

“In some regions, government-related bookings account for up to 80 percent of hotel revenue,” Maulana said in Jakarta. “The government’s efficiency campaign has significantly impacted the hospitality industry, as ministries, state agencies, and even local governments have scaled back public events.”

The impact has been particularly noticeable during the Eid al-Fitr holidays, which are typically a high season for domestic travel and hotel stays. This year, however, many hotels reported much lower occupancy rates compared to last year’s Eid, he added.

According to PHRI estimates, the national hotel occupancy rate fell to around 20 percent last month, down sharply from 40 to 60 percent during the same month in the previous year.

Data from the Central Statistics Agency (BPS) showed that during the January–February period, the national hotel occupancy rate stood at 37.77 percent, a modest decline of 0.51 percentage points compared to the same period last year.

The hospitality industry has long relied on MICE (meetings, incentives, conventions, and exhibitions) activities -- particularly those funded by the government -- as a key revenue stream. However, President Prabowo Subianto’s recently announced cost-cutting drive, aimed at saving over Rp 300 trillion in government spending, has led to strict curbs on non-essential travel, seminars, and meetings by state officials and agencies.

Adding to the sector’s woes, Maulana noted that waning consumer purchasing power has further discouraged travel and leisure spending.

“We’re seeing signs that people are holding back on recreational expenses,” he said.

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