Jakarta. Government budget cuts are hitting Indonesia’s hotel and tourism industries hard, forcing businesses to slash costs and seek incentives.

As a result, the Indonesian Hotel and Restaurant Association (PHRI) and the Indonesian Tourism Industry Association are urging the government to provide immediate tax relief, financial assistance, and increased tourism promotion to mitigate the impact.

Christy Megawati, Head of the Research, Development, and Information Technology Division of PHRI’s Central Leadership Board, said the government’s budget efficiency measures increase the risk of significant losses for hotel industry players.

A "Market Sentiment Survey on the Impact of Government Budget Saving Policies" conducted by PHRI in March 2025, involving 726 hotel industry players across 30 provinces, found that 88 percent of respondents anticipated making difficult cost-cutting decisions, such as layoffs or wage reductions.

Additionally, 58 percent of respondents expected to default on bank loans due to worsening economic conditions. Meanwhile, 75 percent of tourism industry players predicted that hotel tax targets would not be met, and 71 percent  are worried declining hotel revenues would disrupt the industry’s supply chain.

If left unaddressed, 83 percent of hotel industry players believe the tourism sector will continue to decline, potentially hindering economic growth in regions reliant on tourism.

Christy Megawati stressed the urgent need for government intervention to stabilize the hotel industry amid its drastic downturn.

"We urge the government to immediately provide tax incentives, financial assistance, and increased tourism promotion," Christy said, as quoted by Antara on Monday.

Meanwhile, the Chairman of the Indonesian Tourism Industry Association, Hariyadi Sukamdani, highlighted the impact of the government's decision to cut ministry and agency business trip budgets by 50 percent. He said this policy not only reduces spending but also significantly affects the hotel sector, which relies on government business travel.

Given the severe impact of these budget efficiency measures on the hotel industry, the government must urgently relax or reinstate business trip budgets. The repercussions extend beyond the hotel and tourism industries to the broader national economy.