Amid rumors of declining purchasing power, Indonesia's tourism and hospitality industry for the premium class is actually showing a positive stretch. This shows that the country's upper-class economic citizens still have strong purchasing power even for their tertiary needs.

Ministry of Finance (Kemenkeu) employee Syahrul Muttaqin revealed his experience vacationing in Malaysia and Singapore, recently in the year 2025. He actually prefers a vacation abroad rather than exploring inter-provincial domestic destinations.

She compares the cost of a flight from Aceh, where she lives, to Jakarta, which costs Rp 1.8 million one-way (a total of Rp 3.6 million round-trip), while a ticket to Kuala Lumpur is only Rp 700,000 one-way (a total of Rp 1.4 million round-trip). "In my opinion, Jakarta and Kuala Lumpur are similar, right, so I think it's better for me to go to Kuala Lumpur," she explained.

That's just the experience of the middle class, if I may say so. What's more interesting is the phenomenon in the upper class.

Citing Lokadata research, the average annual family expenditure on entertainment for the upper 1 and upper 2 classes is increasing. In 2024, the average annual family expenditure on entertainment for the upper 1 class reached Rp 1.5 million, an increase from Rp 1.2 million in 2019.

Similarly, the average annual family expenditure on upper 2 class entertainment reached IDR 600,000 in 2024, up from IDR 500,000 in 2019.

Meanwhile, the average annual family expenditure on entertainment for economic classes below the upper, namely middle and lower, did not change.

According to Lokadata, they took the definition of the upper economic class as Nielsen's criteria. The characteristics of the upper class are characterized by higher education levels, significant income, access to various resources, and influence over trends.

Lokadata Chief Data Officer Ahmad Suwandi explains that this surge in spending is not a reflection of equitable financial health. He explained, "The increase in non-food spending in Indonesia between 2019-2024 is driven by a paradox: on the one hand, the macroeconomy is growing strongly and GDP per capita is rising, but on the other hand, the middle class is shrinking by 9.48 million people."

According to him, this surge in spending is very likely due to three main factors: economic polarization, shifting middle-class priorities, and digital acceleration. Economic polarization, for example, can be seen in the stable and financially strong upper class, which has increased spending on luxury goods and premium experiences.

"The middle and upper classes have similar travel destinations but different classes, along with different spending patterns," he said. He pointed out that the upper class tends to choose premium travel experiences such as diving or sailing, while the middle class chooses more affordable experiences, such as watching concerts or visiting popular tourist destinations.

The excitement of premium class tourism is also shown by data from the Central Statistics Agency (BPS), namely the room occupancy rate (TPK) of five-star hotels has also increased. In May 2025 the TPK of five-star hotels reached 51.70%, an increase from April which amounted to 50.11%.

BPS data reinforces the optimism of the tourism industry:

• The highest star classification hotel room occupancy rate was recorded in Bali Province (58.10%), followed by DI Yogyakarta (53.94%), South Kalimantan (52.69%), East Kalimantan (52.67%), and DKI Jakarta (51.31%).
• Foreign tourist arrivals in May 2025 reached 1.31 million, up 14.01% (y-on-y).
• The number of tourist trips in May 2025 reached 97.67 million trips, up 17.81% (y-on-y).

This data shows that, despite concerns about purchasing power, people's desire to take vacations and seek new experiences remains high, driving positive growth in the tourism sector.

The high purchasing power of the premium class in tourism is also reflected in the Mandiri Spending Index research released in June 2025. The research states, in May or the long holiday period, there was a growth in upper-class spending on airplane tickets reaching 41 percent, hotels 4 percent, and restaurants by 12 percent.

Bank Mandiri Chief Economist Andry Asmoro said, this data shows that the upper economic class still has sufficient funds to meet tertiary needs such as traveling. Especially during the long holiday season as happened in May.

Entrepreneurs are cautious

Chairman of BPP of the Indonesian Hotel and Restaurant Association (PHRI), Hariyadi BS Sukamdani, expressed a more critical and realistic view. According to him, optimism must be accompanied by caution, given the big challenges looming over the industry, especially related to the decline in people's purchasing power and government policies.

He admitted that some areas such as Bali and Yogyakarta did experience a significant spike in star hotel occupancy, especially in May which coincided with the long holiday.

"Bali, if we enter in May, June, or even from April, it's already starting to get crowded because the tourists are coming in," he told SUAR, (24/7/2025).

Something similar happened in Jakarta, where some 5-star hotels showed upward movement. However, he emphasized that the competition for room rates is now fierce, making room rates tend to fall in order to compete for guests.

"Jakarta at certain times yes. But if you say that the increase is significant, Jakarta is not necessarily like that," he added. He said many hotels in Jakarta are still struggling with occupancy of around 50%.

Hariyadi highlighted the phenomenon of millennials and Gen Z who are aggressively on vacation, even willing to spend savings on travel. While this drives demand, PHRI notes that this high consumption does not necessarily reflect strong purchasing power.

On the contrary, indications of a decline in people's purchasing power can be seen from the downward trend in room prices at 4- and 5-star hotels.

"The purchasing power of this community continues to decline. So if for example the 5-star is crowded, we also have to look at the 4 and 5-star hotels, lest the prices also drop," he explained.

Furthermore, the PHRI Chairman highlighted three main factors that have the potential to become stumbling blocks for the hospitality industry until the end of the year:

1. A decrease in people's purchasing power: This is the biggest concern, as it directly affects people's ability to take vacations and pay for accommodation at normal rates.
2. Government budget cuts: Limited and not fully disbursed government budgets also impact the tourism sector, especially on activities that involve government spending.
3. Regulatory restrictions: The ban on study tours and graduation events in hotels has been a major blow to occupancy, especially for hotels that rely on the MICE (meeting, incentive, convention, and exhibition) segment and school events. "The situation is that purchasing power is already down, plus there are prohibitions like that, it also has a big influence," he said.