The Potential Hotel Layoffs in Indonesia and Creative Ways to Avoid Them

In 2025, Indonesia’s hotel industry is facing mounting pressure from economic shifts, tighter government policies, and rising operational costs. While large-scale layoffs have not yet occurred, many hotels are preparing to reduce staff in the coming months unless conditions improve.

However, crisis can also be a catalyst for innovation. Find out why hotels are planning layoffs, and the creative, out-of-the-box business strategies to help prevent this issue in this article.

Why Hotels Are Planning Layoffs in Indonesia

1. Stricter Efficiency Policies for Civil Servants (Since 2025)

Hotels across Indonesia have felt the impact of newly reinforced policies discouraging civil servants from holding meetings, events, or overnight stays in hotels. These measures, reintroduced in 2025 after years of inconsistency, have sharply reduced weekday bookings—especially for hotels in secondary cities and provincial capitals that depend on government-related events.

2. Post-Pandemic Recovery Still Inconsistent

Although the tourism industry has rebounded overall, many hotels—especially those catering to business travelers and government events—continue to see inconsistent occupancy. For example, Bali’s hotel occupancy rates dropped by 3.4% in March 2025 compared to the previous year, while Jakarta saw a 4.4% decrease. This slow recovery affects revenues and pressures hotels to reconsider staffing levels.

3. Operational Costs Continue to Rise

Hotels are battling rising expenses in utilities, food supplies, and wages. Combined with shrinking revenues, these cost pressures push operators to explore staff reductions to stay solvent.

4. Automation Is Redefining Staffing Needs

The adoption of self-check-in kiosks, digital keys, and AI-based concierge services is growing across Indonesian hotels. These innovations enhance guest experience but reduce the need for some staff roles. This technological shift contributes to hotels’ plans to optimize headcount.

5. Tourism Trends Are Shifting

Domestic travelers increasingly prefer budget and short-stay accommodations over full-service hotels. Many traditional hotels that have not adjusted their offerings are losing market share, prompting cost restructuring and workforce planning.

Out-of-the-Box Solutions to Prevent Layoffs

Instead of reacting with layoffs, hotels can repurpose their resources and rethink what a modern hospitality business can offer:

1. Convert Rooms into Co-Living or Student Housing

Hotels with consistent vacancies can collaborate with universities, training centers, or edutech platforms to provide affordable housing for students, interns, or remote workers—especially in cities like Yogyakarta, Malang, or Bandung.

2. Launch a Hospitality Training & Upskilling Center

Transform part of the property into a paid or subsidized training hub for hospitality skills, such as front-desk service, kitchen operations, barista training, and tourism English. This creates a new income stream while strengthening the workforce pipeline.

3. Repurpose Meeting Rooms into Coworking or Creative Studios

Hotels can lease space to:

• Freelancers and remote teams as coworking zones
• Podcasters and YouTubers for studio use
• Local NGOs or startups needing temporary offices
  Bundling internet, drinks, and private booths turns idle space into revenue.