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Yogyakarta, the capital city of the Special Region of Yogyakarta in Indonesia, continues to capitalize on the Indonesian Government’s initiative to develop ten new tourist hubs across the country, known as the “Ten New Balis”. Located approximately 40 kilometers (25mi) southwest of Borobudur, the world’s largest Buddhist temple and hub of one of the “Ten New Balis”, Yogyakarta’s hotel sector has witnessed dramatic growth in recent years. With a range of heritage buildings, famous landmarks and monuments underpinning Yogyakarta’s tourist industry, the region has seen a sizeable growth in the star-rated hotel inventory.

The growth in the supply of star-rated hotel accommodation has been the dominant headline for the Yogyakarta hotel market over the past ten years, but especially over the past five years. The number of star-rated hotel rooms has increased from 3,300 in 2008 to 14,400 in 2018, a 337% increase in inventory or a CAGR of 15.9%. Over the past five years the supply of star-rated rooms has grown at a CAGR of 20% as illustrated in the table below.

Growth in Yogyakarta’s Star Rated Hotel Sector 2003-2018

Source: BPS – Statistics of Daerah Istimewa Yogyakarta Province & Hotel Investment Strategies

Apart from the past couple of years, the growth in non-classified room capacity has grown more modestly than star-rated hotel accommodation as illustrated in the table below. The number of non-classified hotel rooms has increased from 12,200 in 2008 to 18,300 in 2018, an increase in inventory of 51% or a CAGR of 4.2%. Over the past five years the supply of non-classified rooms has grown a little faster at a CAGR of 6.2% as illustrated in the table below.

Growth in Yogyakarta’s Non-Star Rated Hotel Sector 2013-2018

Source: BPS – Statistics of Daerah Istimewa Yogyakarta Province & Hotel Investment Strategies

Based on a Box-Jenkins model, an advanced extrapolative forecasting method, we forecast the number of domestic visitors staying in Yogyakarta’s 5-star hotels to grow by 4.8% from 357,000 in 2018 to 374,00 in 2019. We forecast 399,000 in 2020, up 6.6% on 2019.

Over the past ten years, the number of domestic guests staying in 5-star hotel in the city has grown from 187,000 in 2008 to 357,000 in 2018, a CAGR of 15.3%. Over the past five years the growth rate has moderated slightly, growing at a CAGR of 13.8%.

Historical & Forecast Growth in Monthly Domestic Guests Using 5-Star Hotels in D.I. Yogyakarta 2006-2020

Source: BPS – Statistics of Daerah Istimewa Yogyakarta Province & Hotel Investment Strategies

We forecast the number of foreign visitors staying in star-rated hotels to decline by 17% from 238,000 in 2018 to 197,000 in 2019. We forecast 199,000 in 2020, up marginally by 1% on 2019. Over the past ten years, the number of foreign guests staying in Yogyakarta’s star-rated hotels has grown from 92,000 in 2008 to 238,000 in 2018, a CAGR of 10%. Over the past five years the growth rate has moderated slightly, growing at a CAGR of 8%.

Historical & Forecast Growth in Monthly Foreign Guests Using Star Rated Hotels in D.I. Yogyakarta 2006-2020

Source: BPS – Statistics of Daerah Istimewa Yogyakarta Province & Hotel Investment Strategies

Utilizing a Box-Jenkins model once again, we forecast average room occupancy for the star-rated hotels in Yogyakarta at 57.1% in 2019 and likewise for 2020. Annual occupancies have remained relatively constant over the past five years with a high of 59.06% in 2017 and a low of 56.22% in 2016.

Historical & Forecast Growth in Monthly Room Occupancy for Star-Rated Hotels in D.I. Yogyakarta 2006-2020

Source: BPS – Statistics of Daerah Istimewa Yogyakarta Province & Hotel Investment Strategies

Yogyakarta’s hotel sector is expected to benefit significantly with the recent opening of its new international airport in the coastal area of Kulon Progo Regency along with further marketing and infrastructure support for the region, especially in light of the Government’s decision to identify Borobudur as one of three priority “Ten New Balis” for further development as a major tourist hub in Indonesia’s expanding tourist industry.