Higher Electrical Rates to Burden Indonesia's Small Inns

(6/19/2010)

Planned increases in electrical rates paid by Indonesian businesses and private consumers are expected to place an unusual burden on Indonesia's low-cost Melati-class hotels who will find it problematic to increase their very low rates in order to pay higher power bills.

Quoted by the national news agency Antara, Istijab, the chairman of the Yogyakarta branch of the Indonesian Hotel and Restaurant Association (PHRI) said, "the increase in the basic electrical charge will prove an increasing burden for hotel operators, particularly Melati-class hotels who will face higher operating costs while finding it impossible to increase their tariffs."

The PHRI executive explained that electrical costs already represent as much as 20% of the total operating costs, with higher electricity rates certain to only increase this burden.

Elaborating on the same theme, Istijab said: "Hoteliers have been continually trying to reduce energy costs, although with great difficulty. Reducing electricity costs is difficult since this automatically involves the comfort level and service provided to a hotel's guests. It's impossible to deny a guest wishing to use air-conditioning, hot water, bright lights or other electrical appliances such as television, Internet or music systems."

He also said that the State Electrical Board (PLN) recommendation to reduce consumption between 5:00 pm and 10:00 pm was not practical during the peak operating hours for hotels. "In the past we experimented with starred-hotels that were required to decrease electrical use by 40% or face penalties from PLN," said Istijab. In that instance, hotels were able to replace PLN supplies with power from their generating sets, which resulted in increased operating costs in other areas of hotel operations.

Explaining the cost dilemma, Istijab explained: "From a cost standpoint, fuel for generator sets are almost the same as the electricity consumption saved. But the use of generators requires expensive routine maintenance."

Yogyakarta hotel owners at one time threatened to go on strike and cease operations if the government moves ahead with plans to increase electrical tariffs. Istijab told Antara that he lobbied his members not to take such action, especially with Yogyakarta's busiest tourist season just ahead.