Shortage of Hotels in Indonesia, Homestay Development is the Answer
Indonesian authorities are eager to boost the number of tourists in Indonesia, both domestic and foreign tourists, because this will put the nation's economic wheels in motion, create employment opportunities for local communities and, in the case of foreign tourists, will result in rising foreign exchange earnings. In order to absorb a larger flow of tourists the government of Indonesia wants to see the development of more homestay accommodations across the Archipelago.
Over the next two years the Indonesian government wants to see an additional 100,000 homestays rise across the Archipelago to absorb the expected 275 million domestic tourists and 20 million foreign tourists by 2019. Currently, there is a lack of hotels and homestay accommodations in Indonesia. Therefore, whenever there is a big event in Indonesia, especially if it is an international event, there usually occurs a supply shortage in terms of lodging. For example, on 4-5 March 2017 the Indo MXGP 2017, a motorcross series, is organized in Pangkal Pinang on Bangka island. However, there have been a lot of complaints from those who want to visit this event because they were not able to reserve a room in a hotel.
Read more: Tourism Sector of Indonesia
Considering it may not be economically viable to develop new hotels in certain regions, the answer for the short-term (according to the government) is the homestay. If more homestay accommodations are developed and show sufficient demand from tourists in a specific area, then investors will start to become eager to develop a hotel in that area (as well as establishing supporting infrastructure).
Indonesian authorities allocated IDR 60 trillion (approx. USD $4.5 billion) for the development of homestays. These funds will be sent to the villages in ten priority destinations where programs are to be developed to build homestay accommodations as well as to teach locals how to manage a homestay appropriately.
Homestay Development Target of Indonesian Government:
| Destination | Amount |
| Toba Lake | 1,200 |
| Tanjung Kelayang | 700 |
| Tanjung Lesung | 1,200 |
| Batavia City & Thousand Islands | 1,200 |
| Borobudur | 2,200 |
| Bromo-Tengger-Semeru | 1,200 |
| Mandalika | 2,200 |
| Labuan Bajo | 700 |
| Wakatobi | 700 |
| Morotai | 700 |
Source: Tourism Ministry
Based on data from Statistics Indonesia (BPS), there were 2,387 hotels in Indonesia in 2016, with the total number of rooms at 233,007, up 8.7 percent (y/y) compared to one year earlier.
Hotels in Indonesia:
| Type |
Amount |
| 1-Star Hotels | 384 |
| 2-Star Hotels | 528 |
| 3-Star Hotels | 839 |
| 4-Star Hotels | 453 |
| 5-Star Hotels | 183 |
Source: BPS