A policy banning all government officials from holding meetings and conferences in hotels, as well as reducing their traveling, has taken a toll on the hotel industry as occupancy rates have fallen one month after the policy took effect.
The Central Statistics Agency (BPS) announced on Monday that occupancy in star-rated hotels in 27 provinces fell to 50.13 per cent in December last year, against 54.45 per cent in November and 55.73 per cent in December of 2013.
"We believe the decline is related to the policy to limit officials from having meetings and conferences in hotels," said BPS chairman Surya-min, adding that many officials usually spent the night in hotels where events were taking place.
"If the policy is maintained, there will be a slowdown in the contribution of the hotel industry to economic growth," he said.
At the request of President Joko "Jokowi" Widodo, Administrative and Bureaucratic Reform Minister Yuddy Chrisnandi issued three circulars banning government officials from lavish lifestyles and instructing them to make numerous savings.
One of these circulars came into effect on Dec 1, ordering all government agencies to use their own meeting rooms and banning them from renting meeting halls or other venues, including resorts and villas, except for large meetings.
Jokowi has targeted slashing the 2015 budget for government officials' meetings and travel by Rp 16 trillion (S$1.76 billion) to Rp 25 trillion.
The BPS also announced that the number of foreign tourist arrivals last year rose by 7.19 per cent to 9.44 million, up from 8.8 million in 2013.
Tourism Ministry spokesperson Vincent Jemadu said this figure was in line with the government's target of achieving 9.3-9.5 million foreign tourist arrivals, even though it was lower compared to growth between 2012 and 2013 when the country saw a 10 per cent increase in arrivals.
"The growth is basically lower than that in previous years because of slower economic growth in Japan and Europe," Vincent said.
According to the BPS, the highest annual increase in foreign tourist arrivals was recorded at Lombok International Airport in West Nusa Tenggara, with a jump of 73.06 per cent, followed by Ngurah Rai International Airport in Bali with 15.11 per cent, and Minangkabau International Airport in West Sumatra with 13.73 per cent.
This year, the ministry hopes to attract around 10 million foreign visitors.
Among the programs to increase arrival numbers was waiving visa requirements for visitors from China, Japan, South Korea and Russia this year, according to Vincent.