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Our previous post, “Significant Growth in Indonesia’s Star-Rated Hotel Supply 1985-2018”, generated much discussion about how the growth at the provincial level was distributed among the star-ratings. In this post we have briefly reviewed the growth in rooms by star rating and province for two periods, a five year period between 2013 and 2018 and a nine year period, from 2009 to 2018.

As illustrated in the table below, Lampung Province, a province occupying the southern tip of the island of Sumatra, witnessed the highest growth in 3-star room supply over the period 2013-2018, with a compound annual growth rate (CAGR) of 35.4%. It was followed by Sulawesi Selatin (a province in the southern peninsular of Sulawesi) and DI Yogyakarta which grew at CAGRs of 32% and 31% respectively. See the map at the end of the post to locate the provinces.

Nusa Tenggara Barat – NTB, (West Nusa Tenggara), a province which comprises the western portion of the Lesser Sunda Islands, with the exception of Bali, which is its own province, witnessed the highest growth in 5-star room supply over the past five years, with a CAGR of 14.6%. It was followed by Sumatera Selatan with a CAGR of 8.7%.

Our earlier post, “The Growth of Star Rated Hotel Room Demand by Indonesia Province 2012-2017”, found that the demand for 2-star hotels had led the way growing at a CAGR of 33% over the five year period. It was followed by 3-star, 4-star and 5-star room demand, which had grown at CAGRs of 28.8%, 26% and 16.1% respectively. It appears that the recent demand growth has grown more strongly than supply growth, resulting in increased occupancies across the country.

Growth in Star-Rated Hotel Room Supply by Star Rating & Indonesia Province 2013-2018 (Ranked by 3-Star Growth)

Source: Hotel Investment Strategies, LLC based on an analysis of BPS-Statistics Indonesia data.

The growth rates in star rated hotel room supply over the nine year between 2009 and 2018 is tabled below. As expected the growth rates for the two periods, 2009-2018 and 2013-2018 are positively correlated with a correlation coefficient for 4-star hotels of 0.72, followed by 1-star at 0.61 and 5-star at 0.50.

Growth in Star-Rated Hotel Room Supply by Star Rating & Indonesia Province 2009-2018 (Ranked by 3-star Growth)

Source: Hotel Investment Strategies, LLC based on an analysis of BPS-Statistics Indonesia data.

With tourist arrivals almost doubling over the past five years, growing from 8.8 million in 2013 to 15.8 million in 2018, Indonesia’s star-rated hotel supply has experienced a dramatic expansion over the same period as illustrated in the tables above.  Our report, “Short-Term Forecasts of Visitor Arrivals in Indonesia, 2018-2020”, can be downloaded here.