No-Star Hotels in Malang facing Potential Bankruptcy Threat

Malang, E Java - The "melati-class" hotels, a local term for no-star hotels, in Malang, East Java, are facing potential bankruptcy as stiff competition over room rates with the rapidly growing star hotels in the region increases. Herman Sumaryono, Head of the Indonesian Hotel and Restaurant Association (PHRI) of Malang, said here on Thursday that the rapid hotel-industry growth in the region is much higher than the occupancy level, and so the no-star hotels cannot compete with the star hotels. "In fact, during the long school holiday for Christmas and New Year¿s Eve this year, some no-star hotels have no reservations at all. This is worrying. They (hotel rooms) should have been full during this special time," Herman Sumaryono said. The no-star hotels often do not have any spectacular programs for hotel guests on the eve of the year-end. However, the star hotels do offer such services and attractions to their customers, and some of them have invited famous artists to perform. The no-star hotels have been struggling with a minimal budget and have found it hard to offer additional services to their guests, Sumaryono noted, adding that star hotels are now offering affordable and competitive room-rates to attract more guests. "The rapid growth in the hotel industry in the region may trigger room-rate competition. However, we do hope the star hotels will stay in their class (level) and will not offer low room-rates that could knock the no-star hotels down," said Sumaryono. There are 60 hotels, 15 of which are star hotels, in the Malang District. The number is expected to increase, with at least 18 new hotels due to launch by the end of 2013. In addition to the rapidly growing hotel industry, some industry players are also offering guesthouse accommodation by redesigning old houses to attract foreign tourists. (*)