The Threat of Digital Disruption in the Hotel Sector

Technological advancements don't always bring advantages. The disruption (massive and rapid change) of digital technology has impacted several sectors, such as conventional transportation and retail services. If unprepared, the hotel industry will also face similar consequences.

The emergence of travel and accommodation applications such as Airbnb, Foursquare, Traveloka.com, Tiket.com, and others can significantly impact the hotel industry if not immediately addressed, especially for star-rated hotels. These Android-based travel applications typically provide information on hotels or lodgings at low prices. Airbnb, in particular, currently offers very cheap accommodation services because they are managed by individuals (private owners).

Data from the Central Bureau of Statistics shows that the number of foreign tourist visits has shown an upward trend since 1974. Similarly, the Hotel Occupancy Rate (HOR) for star-rated hotels has increased post-1998 financial crisis. The number of foreign tourist visits from January to September reached 10.45 million, and President Joko Widodo targeted 20 million visits in 2019. Meanwhile, the average HOR for star-rated hotels until September 2017 was 55.02 percent.