Government Efficiency Has Disastrous Impact on Hospitality Sector

MAKASSAR, KOMPAS—The Indonesian Hotel and Restaurant Association, South Sulawesi, stated that efficiency measures will have disastrous effects on the hotel and tourism sector. At least 20 percent of the more than 29,000 workers in this sector could be affected by rationalization. Those who remain employed will also experience salary reductions.

This was stated by the Chairman of the Regional Management Board of PHRI South Sulawesi, Anggiat Sinaga in Makassar, Friday (7/2/2025). Not only workers, but MSMEs including farmers, breeders, fishermen, and others who have been suppliers of various needs for hotels and restaurants, will also be affected.

"Since last year, occupancy has started to decrease. All this time, especially in Makassar which is a MICE city, hotels and restaurants have relied heavily on government agendas such as meetings, exhibitions, and other events. It is different from hotels in tourist spots that are not too dependent on government activities," said Anggiat.

Based on data from PHRI Sulsel, there are 689 hotels in this area, with the majority located in Makassar. This includes both star-rated and non-star-rated hotels. The number of rooms amounts to 19,641.

The peak condition was experienced by the hotel sector in 2023 with a fairly high occupancy rate. Last year, the occupancy rate dropped to 60-68 percent. Entering 2025, the average occupancy is 20 percent.

"At least 29,100 people work in the hospitality sector in South Sulawesi. If efficiency measures are implemented, there will clearly be rationalization. I estimate the number could reach up to 20 percent. Many hotels might even close. Non-performing loans in the hotel and restaurant business also pose a serious threat," he added.

The city of Makassar has long been known as one of the MICE (Meeting, Incentive, Convention, and Exhibition) cities. Makassar also serves as a center of growth and interconnection between the western and eastern regions of Indonesia.

Even many hotels could close. Bad credit in the hotel and restaurant business is also a serious threat.

Due to its position, various meetings and exhibitions are frequently held in Makassar every year. Not to mention the numerous local events organized by the government. This has led to the development of the hotel and restaurant sectors, as well as the vehicle rental business.

Other businesses also benefit from these various events. From suppliers of various food ingredients to souvenir entrepreneurs.

One of the big events and included in the annual tourism calendar is the Festival Delapan. This exhibition and tourism or cultural attraction event is usually attended by city/district governments from various parts of Indonesia.

“The Delapan Festival is not just an exhibition or cultural attraction. This event is an economic lever. The hotel, restaurant, vehicle rental, UMKM, and souvenir sales sectors greatly benefit from this event. Even neighboring districts of Makassar also enjoy it because usually participants who come do not go home directly but go on vacation,” said M Ramdhan Pomanto.

In Makassar City, the hotel and restaurant sector is the third largest contributor to local revenue through taxes and levies. This sector also absorbs a lot of labor.