Jakarta and Surabaya hotels pivot to leisure demand as MICE activity slows

Hotels emphasized digital promotions and social events to offset lost government MICE revenue.

Hotels in Jakarta and Surabaya have been forced to rethink their operating strategies in 2025, as a sharp slowdown in government-driven MICE activity weighed on performance, according to Savills.

Savills said the decline in public-sector demand during the first half of the year disproportionately affected business-focused cities and large-scale MICE hubs, prompting operators to seek alternative revenue streams. In response, hotels in Jakarta and Surabaya increasingly targeted domestic leisure travelers and online travel agent (OTA) bookings.

According to Savills, operators stepped up digital promotions, social events and leisure-oriented packages in an effort to replace lost government-related revenue. These strategies were aimed at stimulating weekend and short-stay demand from domestic travelers, particularly families and small groups.

Savills noted that four- and five-star hotels have been especially active in broadening their revenue mix. Many properties expanded their focus on weddings, large social gatherings and family events, while still maintaining their positioning within the upper and premium segments of the market.

“This shift reflects a more defensive operating strategy,” Savills said, adding that hotels are prioritising occupancy protection and cash flow stability over aggressive rate growth amid ongoing competition and subdued corporate and government spending.

While government-led activity has begun to recover toward the end of 2025, Savills said the experience of this year has highlighted the importance of demand diversification, particularly in cities heavily reliant on a single demand driver.