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THE INDONESIAN Hotel and Restaurant Association (PHRI) and the Indonesian Tourism Industry Association (GIPI) have urged the government to provide immediate tax relief, financial support and increased tourism promotion. These efforts are to help the tourism sector, especially hotels, amid the impact of budget cuts in the tourism sector.
“Here we urge the government to immediately provide this intervention including tax relief, financial support, and increased tourism promotion,” said Head of Research and Development and IT of the PHRI Central Executive Board (BPP) Christy Megawati at a press conference in Jakarta, Saturday (03/22), 2025.
According to Christy, this intervention is considered important to stabilize the tourism sector, which has experienced a drastic decline, while maintaining the long-term prospects of this industry in Indonesia.
Christy said that the budget efficiency policy initiated by the President has an impact on hotel operations and has the potential for significant losses.
According to the results of the survey “Market Sentiment on the Impact of Government Budget Retrenchment Policies” conducted by PHRI in March 2025, out of 726 respondents who are hotel industry players in 30 provinces in Indonesia, 88% of them predicted that they would have to make difficult decisions such as layoffs (PHK) or reducing employees’ wages to reduce the burden of operating costs.
In the hotel sector, which has a large number of employees, this could lead to operating deficits and even hotel closures. As many as 58% of respondents also predicted the possibility of defaulting on bank loans due to increasingly difficult conditions.
The impact of this budget cut also affects hotel tax revenues. As many as 75% of tourism industry stakeholders predict that the tax target will not be met. Meanwhile, 71% are concerned that the loss of hotel revenues will disrupt the industry’s supply chain.
If the situation is not resolved immediately, 83% of industry players believe that the tourism sector will continue to decline, negatively impacting regional economies that are heavily dependent on tourism.
Echoing Christy’s sentiments, GIPI Executive Director Hariyadi Sukamdani also called for an easing of the situation. He also addressed the policy that instructs ministries and institutions to cut the official travel budget by 50%.
According to him, although the policy reduces the budget by 50%, the reality on the ground is that there is no income at all from the tourism sector, especially from hotels that receive orders related to official travel for ministries and institutions.
“We see that it would be better for the government to implement the 50% immediately. Because as of today, what is happening is that 100% is not working. The most important thing is that the government immediately relaxes or re-implements its budget, because if it takes too long, the impact will spread everywhere,” he added.
Without quick action, Hariyadi said, the negative impact is expected to spread not only in the tourism sector, but also in the economy as a whole.
President Prabowo Subianto, through Presidential Instruction (Inpres) Number 1 of 2025 on Spending Efficiency in the Implementation of the State Budget for Fiscal Year 2025, has cut the official travel budget for regional governments by 50%.
In the Presidential Instruction, it is explained that the amount of efficiency of IDR306.6 trillion of the state budget, consisting of the 2025 budget of ministries/institutions of IDR256.1 trillion and transfers to the regions of IDR50.5 trillion. [antaranews]
