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.

Illustration of doing various of beneficial activities in a hotel. Image by IHG

4. Offer Subscription-Based Hotel Memberships

Launch flexible monthly plans that include:

Set numbers of room nights
Access to hotel gym, pool, or lounge
Discounts on food and beverage
This “Hotel-as-a-Service” model appeals to digital nomads, freelancers, and business travelers.

5. Facilitate Government-Approved Virtual Events On-Site

Though civil servants can’t meet in person at hotels, they still need to run meetings. Hotels can provide:

Streaming-ready hybrid rooms
Quiet rooms for speakers
Meal delivery to participants’ homes
This recaptures lost MICE revenue through modern formats.

6. Rent Out Kitchens for Cloud Kitchens or Online Food Brands

Unused hotel kitchens can be leased to:

Food delivery startups
Culinary influencers or ghost restaurants
This keeps kitchen staff employed while supporting the booming food delivery sector.

7. Launch Micro Wellness & Mental Health Retreats

Design short escape packages focused on:

Yoga, mindfulness, and digital detox
Counseling or mental health weekends
Nature-based healing stays
Wellness tourism is growing fast and aligns with Indonesia’s natural assets.

8. Market Hotels as Emergency Office Backup or Offsite Hubs

Offer secure, plug-and-play workspaces for:

Small businesses during outages or renovations
HR teams conducting training or team building
These weekdays use cases replace lost business meeting revenue.

9. Turn Hotel Facilities into Local Community Assets

Open the gym, pool, or lobby café to locals via memberships or day passes. Run:

Weekly cooking classes
Movie nights or art shows
Pop-up bazaars for local creators
This increases visibility, loyalty, and foot traffic.

10. Rebrand with a Social or Eco-Conscious Purpose

Hotels that embrace sustainability or social impact can:

Hire and train from disadvantaged communities
Cut single-use plastics
Support local artisans in decor and amenities
This story-driven branding attracts younger, eco-aware guests and businesses seeking impact partners.

All in all, the possibility of hotel layoffs in Indonesia is a growing concern in 2025—but not yet a certainty. With government-related bookings down and costs rising, many hotel operators are preparing contingency plans to protect their businesses.

However, with bold thinking and creative pivots, hotels can transform threats into new opportunities. Whether it’s by reimagining rooms as student housing, launching hospitality schools, or creating new business models, the hospitality sector has more options than ever before to stay profitable without sacrificing jobs.

In the new era of travel and work, those who innovate will not just survive—they’ll lead.

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