In August, Forbes Indonesia recently had the opportunity to interview Sjefke Jansen, Jakarta Hotels Association (JHA) Chairman and General Manager of Hotel Indonesia Kempinski. JHA consists of 37 five-star and four-star hotels in the capital, with notable members such as Raffles Hotel, The Dharmawangsa, The Ritz-Carlton, Grand Hyatt, Fairmont, and JS Luwansa.
Sjefke himself has over 25 years of experience working in the hospitality industry. He started his tenture as Kempinski's general manager since February 2018. He previously worked as the general manager at the Belmond Grand Hotel Europe in St. Petersburg, Russia, from 2014 to 2018, Le Touessrok in Mauritius from 2010 to 2014, and the Oberoi Hotels & Resorts in Delhi, India from 2006 to 2010. And of course, he has been through and dealt with much economic crisis during his career.
Here are edited excerpts of the interview.
Forbes Indonesia (FI): What do you see as one of the most difficult challenges that hotels face at this time with large-scale social distancing measures (PSBB) loosened and domestic travelling allowed again after half a year of COVID-19?
Sjefke Jansen (SJ): One of the dilemmas that hotels face in the pandemic is the decision on whether to start opening swimming pools, gym, and spa at this time. With international travel still restricted and generally less people are travelling less, staycation seems like the ideal target market we should be aiming for. However, hotel facilities such as pool and gym are essential attractions to potential visitors, and if they know that some of the facilities are closed, they might not want to stay there after all. For all members of JHA, we have decided to keep our hotel facilities open with strict health and safety protocols.”
FI: What do you think hotels need to do to survive lower occupancy rates due to the pandemic and are there any other significant revenue streams beside stay-ins?
SJ: I can speak for this hotel (Kempinski) that we have been quite fortunate because 95% of our hotel visitors are Indonesians, so the international travel ban hasn’t affected us much. Despite that, just like other hotels, our occupancy rates have decreased since the earliest confirmed COVID-19 cases here back in March, but rates have started improving again as of late. Currently, Kempinski averages 30-40% occupancy rates in weekdays and 60-80% occupancy rates during weekends. Thankfully, the shopping mall next to us (Grand Indonesia) have reopened as well so that helps bring in more visitors to our hotel. In addition, we also have a loyalty card collaboration between Grand Indonesia and Kempinski called G Card, where hotel visitors and shoppers can earn points and enjoy discounts from the hotel and mall tenants. As for alternative revenue streams, we have focused more on outside caterings, offering premium menus from our restaurants.
FI: Which consumer age groups do you think will start spending the quickest as soon as tourism and other leisure segments are fully available again?
SJ: In my opinion, people in their fifties and above would be spending the quickest and the most as soon as traveling and other industries are fully accessible again because they have the highest disposable income compared to other age groups. Nowadays, I see a lot of millennials in malls but not a lot of them carry shopping bags. After a large part of the country’s population is negatively impacted, whether it is lay-offs or salary cuts, baby boomers are generally the ones with the highest income and larger savings, thus encouraging them to travel and spend once fully available again.
FI: Before international travel became prohibited, which countries contributed the most visitors to members of JHA?
SJ: Before the pandemic, Singapore, Japan, and Malaysia were the top three countries that were visitors of all hotels in JHA. Also, most hotel visitors were in Jakarta for business trips, with a minority coming in as tourists.
FI: What kind of challenges do hotels face that were directly caused by the COVID-19 pandemic?
SJ: As of now, restaurants, shops, hotels, and other public places are allowed to operate again albeit on a 50% capacity. That being said, the restaurants in hotels are forced to reduce their inventory by half despite costs such as rent, electricity, and wages remaining the same or just a bit lower. With visitors reduced to 50% or less as opposed to pre-pandemic, restaurant waiters and bartenders get significantly less money from service charges and tips as not many people are still too cautious to visit restaurants now. Also, service charges and tips can contribute to as much as half of our waiters’ monthly wages, so the pandemic has affected them greatly.
FI: For members of JHA, what do their revenue composition look like now and how different is it compared to pre-pandemic times?
SJ: Before COVID-19, on average, the food % beverage (F&B) sector can contribute up to 55% of JHA members’ revenues. Meanwhile, overnight stays take into account 35% of sales, with weddings and business conferences contributing the remaining 10%. However, since the pandemic started, the trend is beginning to look more fifty-fifty between F&B and overnight stays, with weddings and conferences contributing little to none as large gatherings are still largely prohibited, with current weddings and business conferences being kept at a small capacity.
FI: Do JHA and the government work or communicate together on the recovery process for hotels with the economy gradually reopening?
SJ: Unfortunately, not at this time. Besides occasional health and safety inspections, they haven’t reached out to us yet, whether it is to share information with us or asking for our inputs as industry players. I can speak for all JHA members that we would gladly help the government and are open to giving advices or share most information.”
FI: As a general manager of a five-star hotel, have you seen any differences in the health and safety protocols and the marketing strategies between luxurious and budget hotels?
SJ: Many of the recognizable budget hotel brands are usually owned by a few holding companies that also own famous five-star hotels. They usually keep the health and safety protocols under the same level of strictness, whether it’s on the budget or five-star hotel. In terms of marketing, I think all hotels, budget or high-end, have similar promotion approaches, such as restaurant discounts and overnight stay bundle packages. What’s different is the staff-to-room ratio, where five-star hotels usually have more staffs than rooms, vice versa with budget hotels. In many cases, the ratio is usually 2:1 for high-end hotels and 1:2 for budget hotels.
FI: Do you think the role of the association has changed since the start of the pandemic?
SJ: I think we have become more united and communicative with each other since we are all experiencing the same problem. There is a WhatsApp group with all the members, and since the start of the pandemic, we’ve conversed more and shared updates on the status of the social distancing measures (PSBB). In a way, the association has become a platform for most high-end hotels in Jakarta to share insights on how to sustain through the weak economy.
FI: What is your industry outlook for the remainder of 2020 and when do you think the hospitality sector will fully recover?
SJ: It is currently very difficult for any of the hotels to predict when food traffic will increase back to pre-pandemic levels, but I think it’s almost certain that the negative GDP growth that occurred in the second quarter will continue until the end of 2020 and very likely to sustain until parts of next year. The only reliable piece of information regarding positive cases and number of deaths come from the government and it seems that the total is not slowing down yet. In other words, hotels need to accept, adapt, and operate with limited capacities and improvise new revenue streams for at least until next year. Only when the COVID-19 vaccines are widely available in the country is the moment when the hospitality and tourism segments fully recover.