How to Start a Hotel Business in Central Java

A Guide on How to Start a Hotel Business in Central Java

  • InCorp Editorial Team
  • 19 June 2024
  • 7 reading time

“How to start a hotel business in Central Java?” is the top question you have in your mind once you delve into the realm of the hospitality sector in Indonesia. Starting a business in the tourism industry certainly offers an exciting entrepreneurship journey.

Situated in the heart of Indonesia, Central Java presents a captivating blend of cultural heritage and modern allure. The region’s uniqueness makes it a prime destination for travelers from around the globe. 

This article will guide you on how to start a hotel business in Central Java, from initial planning to operational excellence.  

The hotel business growth projection in 2024

How to Start a Hotel Business in Central Java

The hotel business in Indonesia is predicted to soar in 2023 and 2024. The expected number of hotel guests is projected to increase significantly compared to previous years. The boost in the sector is driven by the resurgence of the tourism sector in various regions and is supported by the upcoming election season.

On the other hand,  Indonesia is unlikely to be significantly impacted by the worldwide economic downturn. According to Bank Indonesia, Indonesia’s economy is expected to rise from 4.5% to 5.3%.

In its official statement, BI mentioned that economic growth in 2023 is propelled by increased household consumption, investment, and growing foreign direct investment (FDI). The completion of various national strategic projects also accompanies it.

Previously, the Indonesian Travel Agent Association (Astindo) also predicted that the potential global recession 2023 would not significantly impact Indonesia’s tourism sector.

Read more: 6 Best Places to Retire in Central Java You Need to Consider

The outlook of hotel business in Central Java 

The hotel industry in Central Java (Jateng) has been experiencing a revival since the beginning of 2023 after being hit by the Covid-19 pandemic. Business operators in this sector report that the first month of 2023 has been better than the previous year and even exceeded their targets.

Ibnoe Ichwan Chambali, the General Manager of Aston Inn Pandanaran Semarang, mentioned that the occupancy rate in early 2023 has already surpassed their target. 

Similarly, Azkar Rizal Muhammad, the Marketing and Branding Manager of Harris Sentraland Semarang, stated that the hotel’s situation improved significantly compared to last year.

Based on these developments, this year has seen increased reservations from customers. In the previous year, many visitors made room bookings on the same day of their stay.

10 things to consider before starting a hotel business in Central Java

There are several things to consider before starting your hotel business in Central Java:

1. Choose the right location

Before starting a hotel business, the location is a critical consideration. Try to focus on where your customers’ footprints are. Only open your hotel close to your competitors if you offer something unique.

2. Find reliable suppliers

Selecting trustworthy suppliers is another vital step. Your hotel will require various supplies like linens, bedding, catering, and stationery. Look for suppliers who offer both quality and affordability.

3. Manage your finances

Running a hotel involves many expenses. You should count building costs, room renovations, and setting up facilities and a restaurant on-site as the main ones. Therefore, you need to consider having experts in your finance team to minimize loss. 

4. Stand out with unique features

Having distinctive features and offerings will increase your chances of success.

Navigating legal requirements when setting up your hotel includes licenses and necessary training.

6. Develop a business plan

Creating an effective business plan is crucial, especially if you’re new to the hospitality industry. It should outline your objectives, sales forecasts, and all aspects of your hotel to help you stay on track and succeed.

7. Market your hotel

Even if your hotel is in a great location, effective marketing is essential to make potential guests aware of your brand.

8. Study your competition

To get ideas for marketing your hotel, look at what your competitors are doing. Visiting their websites and examining how they present their services can inspire your branding.

9. Hiring the right team

Ensuring your team is professional, skilled, and well-qualified is your responsibility as the owner. They should have the credentials and soft skills to bring your business vision to life.

10. Acquire necessary qualifications

Having the right qualifications and credentials is essential, as it establishes your credibility in the eyes of customers and clients. Setting up a hotel is a complex task, and having the right skills will boost your confidence and ability to oversee operations effectively.

How to manage a hotel business in Central Java

After establishing your hotel business, effective management is crucial for its success. To improve your hotel’s management, here are some key points to consider:

1. Team unity

The guest experience depends on the entire staff, not just one person. Your success as a hotel manager relies on your ability to unite your team to provide exceptional service and increase revenue.

2. Follow up on event leads

Converting leads into paying guests is vital for revenue. Encouraging event organizers to choose your hotel is a significant revenue opportunity.

3. Harness social media

In today’s world, social media is a powerful tool. One effective way is to share photos posted by guests during their stay. Encourage guests to use a catchy hashtag or filter.

4. Effective communication

Communication is critical in hotel management to avoid mistakes and crises. Mastering communication keeps your team on the same page, ensuring a seamless guest experience.

Hotel trends change frequently, so it’s essential to adapt. Consider updating your hotel’s appearance every few years based on guest preferences.

6. Streamline employee scheduling

Managing employee schedules in a hotel can be overwhelming. Software can simplify this task, making it more efficient.

7. Standard Operating Procedure (SOP)

Establish a Standard Operating Procedure with guidelines for each role in the hotel. It ensures consistency and efficiency.

8. Embrace feedback

Feedback is invaluable for hotel managers. It provides objective data to make informed decisions, which is crucial for your hotel’s success.

How to start a hotel business in Central Java

Starting a hospitality business with property or land purchase

When creating a hospitality business and considering property or land purchase, you have two options: setting up a foreign-owned company (PT PMA) or a locally-owned company (PT). 

Foreign Owned Company (PT PMA)

With a PT PMA, you can obtain a Hak Guna Bangunan (HGB) title, where the land certificate reflects the name of the foreign-owned company. 

This legal agreement allows you full ownership rights, construct properties, and generate income through property sales or rentals.

Locally Owned Company (PT)

Freehold Titles can only be granted to Indonesian citizens. To secure a Freehold Title for land or property, you must establish a PT.

Alternatively, if you don’t want to set up a PT PMA or a PT, consider obtaining a Leasehold Right, which permits commercial property use.

Building Permit in Indonesia

A Building Permit (IMB) is a crucial registration document for buildings in Indonesia, indicating their intended use, be it commercial or residential. 

Every building in Indonesia must obtain an IMB, ensuring that its actual use aligns with the stated purpose of the IMB, regardless of whether you buy or rent the property.

To secure an IMB, you’ll need various documents, including a land certificate, kavling (land allocation permit), building plans, proper land zoning, signed permissions from neighboring property owners, and service and structural drawings.

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Start your new business with InCorp Indonesia

The hotel business has started recovering after Indonesia’s significant decline in COVID-19 cases. Central Java offers a promising outlook for the hotel business, especially with the upcoming election in 2024. Many hotels in Central Java are expected to host events related to the election.

Investors who aim to capitalize on this momentum can work with InCorp Indonesia to provide property and land ownership and company registration services to help you set up your hotel business in Central Java.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

When a foreigner or their heir move to another country and have not stayed in Indonesia within one year, they must relinquish or transfer ownership rights to someone that meets Indonesian land or property ownership requirements in Indonesia.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.