Indonesia’s luxury hotel sector has officially returned to pre-pandemic occupancy levels, outpacing every other hotel class — which remains 5.5 percentage points behind. The milestone took centre stage at the inaugural Indonesia Tourism Xchange 2026 (ITX 2026), a forum that gathered more than 400 senior leaders from tourism and hospitality at The Langham, Jakarta on Monday.
Themed “Reimagining Journeys”, ITX 2026 was organised by Horwath HTL, C9 Hotelworks, STR, QUO Global, Greenview and Delivering Asia, in partnership with Langham Hospitality Group, and supported by PHRI, the Jakarta Hotels Association and the Bali Hotels Association.
Figures from STR, the hotel analytics division of CoStar Group, show that luxury hotel occupancy in Indonesia for the 12 months ending March 2026 has fully recovered to pre-pandemic levels. Overall hotel rates across the country are also up more than 40% from 2019, with the luxury segment leading average daily rate growth since 2023.
Luxury holds up through every crisis
Jesper Palmqvist, Regional Vice President – Asia Pacific at STR, said the recovery follows a globally consistent pattern in which luxury rebounds ahead of other segments after every external shock.
“Whether you go back to the global financial crisis, the pandemic or the Asian financial crisis, luxury hotels have always proven more resilient. That’s a global fact, not just an Indonesian one,” Palmqvist said. “In 2026, we’re starting to see other segments catch up. The typical pattern is that luxury recovers first, and the rest of the classes follow once conditions normalise.”
He attributed the segment’s durability to the nature of its demand. High-end travellers have the financial flexibility to absorb higher fares, route disruptions or geopolitical tensions without cancelling trips. “They still go. After COVID, the revenge travel wave was led — as it always is — by luxury,” he said.
The pattern is now visible in Indonesia. Hotel rates have climbed 42% across all classes since 2019, with luxury driving the bulk of the increase. The Langham Jakarta is projecting 10% occupancy growth this year, and April 2026 was the property’s strongest month since opening, with occupancy approaching 80%.
“Luxury travellers coming to Indonesia are not looking for replicas of global hotels,” said Sherona Shng, Regional Vice President – Operations, Asia at Langham Hospitality Group. “They want meaning, context and a sense of place. The brands that succeed here are the ones that understand the complexity of Indonesian culture and deliver deeply personal experiences, not standardised ones.”
The recovery is being driven from two directions at once. Indonesia recorded 1.2 billion domestic trips in 2025, up 17.5% year-on-year, while international arrivals reached 18.4 million and are forecast to grow more than 10% this year. The country’s ultra-high-net-worth population also expanded 5.5% between 2023 and 2025, with cumulative growth projected to reach 32% by 2028.
Palmqvist added that Indonesian rates still have significant headroom. In US dollar terms, Indonesia sits close to India and well below Thailand, despite a domestic market and wealth base already capable of absorbing premium product. “Indonesia has a rare combination — a large domestic market plus a pocket of wealth that wants a specific kind of product. Very few countries have both.”
Bali leads the branded residence surge
The luxury recovery is running in parallel with a sharp expansion in branded residences. Research from C9 Hotelworks shows Asia’s branded residence pipeline now stands at IDR707 trillion (USD 40 billion) across 50,025 sellable units — a 30.3% year-on-year increase — with a total supply of 64,581 units across 268 developments.
Indonesia accounts for IDR24.7 trillion (USD 1.4 billion) of that pipeline, across 1,145 launched units. What sets the country apart is its structure: 34% of developments are hybrid projects that combine condominium units with landed property such as villas under a single hospitality-led scheme — the highest ratio in Asia.
“Asia’s branded residence pipeline has reached IDR707 trillion. Indonesia’s market is valued at IDR24.7 trillion, but what distinguishes Indonesia is not scale, it is structure,” said Bill Barnett, Managing Director of C9 Hotelworks. “One in three projects integrates a hotel brand with a residential component. No other market in Asia has reached that ratio.”
Bali is the engine of that growth, contributing 25% of the national branded residence market value. The island is home to more than 70 active hospitality-led developments, with the largest cluster in Canggu/Berawa (1,703 units across 25 properties), followed by Uluwatu, Seseh/Pererenan/Nyanyi, Seminyak and Sanur.
Edward Kusma, Director of Harmoni Bali, said the segment is being propelled by a post-COVID shift in buyer behaviour. “Many people want to move to Bali, but there aren’t many products that fit. Branded residences give buyers certainty on the operator, legality and service. Essentially, it’s a hassle-free environment.”
Kusma argued that Bali real estate is actually more affordable than Phuket despite higher hotel rates, leaving a valuation gap yet to close. The constraint, he said, lies in supporting infrastructure: international schools and hospitals remain limited, alongside congestion, waste management and water-supply challenges in southern Bali.
“There are certainly problems in Bali with overdevelopment as well. We engage consultants to help tackle our own issues, but I really hope local governments can be more supportive and accelerate the infrastructure needed to manage the traffic and trash problems we’re seeing right now,” Kusma said.
New regulations expected to redirect foreign capital
The branded residence segment is also poised to benefit from a new regulatory framework. The Indonesian government has mandated that all short-term rental accommodation demonstrate full legal compliance by 31 March 2026. Properties that fail to verify their business registration through the national digital framework face removal from major online booking platforms.
Foreign individual investors must now either establish a PT PMA (Foreign Investment Company) with committed capital exceeding IDR10 billion (around USD 600,000), or rely on the underlying local landowner for compliance.
The higher barrier to entry is expected to redirect foreign demand toward branded residences, which offer professionally managed and legally structured rental frameworks.
“The new compliance framework is expected to redirect foreign capital toward branded residences — product that is professionally managed, legally structured and fully compliant by design,” Barnett said. C9 Hotelworks expects co-located hotels and branded residences to emerge as the next phase of market development in Indonesia, absorbing demand displaced from the unlicensed rental segment.
Matt Gebbie, Director – Pacific Asia at Horwath HTL, closed with a strategic note: “Indonesia’s opportunity is smart growth. Luxury hotels are facing higher expectations on performance, capital returns and differentiation. Understanding which destinations, segments and concepts genuinely perform in 2026 and beyond is now critical for both investors and operators.”