A Site Feasibility Checklist Before Funding a Hotel or Resort Development in Indonesia

A hotel or resort development investment in Indonesia should move toward funding only when demand, usable site area, development costs and operating assumptions have been tested for that property. A land offer and an attractive concept do not establish that the project can be built or operated as forecast.

This checklist helps foreign investors decide what evidence to request before committing to a site or releasing substantial development capital. For PT PMA ownership, capital and hotel licensing rules, use the separate InvestinAsia guide linked below.

Test Demand Before Fixing the Room Count

The first feasibility question is who will use this property throughout the year. Build the proposed room count and rate from destination-level demand, rather than choosing them to make a construction budget work.

BPS reported a 50.76% room occupancy rate for Indonesian star hotels in May 2026. That figure measures a national hotel group during one month. It does not predict occupancy for a proposed resort, its destination or its opening year.

Request a monthly forecast that separates the guest segments relevant to the site. Depending on the concept, those may include leisure travelers, corporate guests, groups, weddings and long-stay customers.

For each segment, identify the evidence behind expected room nights and rates. Examine comparable properties, existing and announced room supply, access, booking patterns and the low season.

Model occupancy and average daily rate together. A higher rate may reduce the bookings the project can attract; a higher occupancy assumption may depend on discounts and distribution fees that reduce net revenue.

Then test a delayed opening and a slower first year. The useful question is how much additional cash the owner needs if the property takes longer to reach its forecast, not whether one annual occupancy target looks plausible.

Establish the Usable Site, Not Just Its Certificate Area

The land area on a certificate may differ from the area that can support the proposed buildings and services. Site feasibility needs a coordinated review of rights, boundaries, access, terrain, spatial status and infrastructure.

Verify Rights, Boundaries and Access

Request the land certificate, holder information, survey, transaction history and records of any registered encumbrances. Indonesian land counsel should verify the proposed transaction and remaining term against the relevant land records and PP No. 18 of 2021.

Confirm how guests, construction vehicles and emergency services will reach the site. Each route needs a practical design and an adequate legal basis; a visible road alone does not settle the access question.

Test the Concept Against Spatial and Physical Constraints

PP No. 21 of 2021 governs Indonesia’s spatial planning framework. Obtain a location-specific assessment for the hotel and any substantial supporting facilities before assuming the concept fits the site.

Place the boundary survey, topographic plan, access route, utility areas and first concept drawing on one coordinated plan. Check whether slopes, drainage, setbacks and required infrastructure reduce the building area or room count.

If the room count falls, revise both revenue and construction cost. A smaller property may lose room income without a proportionate reduction in roads, utilities, shared facilities or pre-opening spending.

Scope Environmental and Building Work

PP No. 22 of 2021 addresses environmental protection and approvals, while PP No. 16 of 2021 addresses building requirements. The applicable documents and technical work depend on the site’s location, design, scale and activities.

Ask the project team to assess water supply, wastewater, power, drainage, fire access and other site-specific needs. Put studies, approvals and required infrastructure into the schedule and cost plan before treating the design as fundable.

If the project involves buying an operating company or entering a joint venture, the review also extends to ownership, liabilities, tax and contracts. Use InvestinAsia’s business due diligence checklist for foreign investors for that wider transaction scope.

Price the Operating Model Before Accepting Its Forecast

A management or franchise proposal affects the owner’s return even when the room revenue forecast stays the same. Compare operator options using a consistent forecast and the complete cost of each arrangement.

Request the proposed base and incentive fees, reservation charges, marketing contributions, technical-service costs and pre-opening obligations. Include any required furniture and equipment replacement reserve in the owner’s cash flow.

Review who controls annual budgets, major capital expenditure, purchasing and changes to brand standards. Examine performance tests and termination terms before assuming the owner can replace an operator after a weak year.

If the development also sells villas or residences, keep those sales proceeds separate from recurring hotel income. Identify which entity receives each payment and which entity owes the construction or operating obligation.

Set Funding Conditions for Each Project Stage

A feasibility review becomes useful when it changes a decision. The following table is a practical investment-screening framework, not an official Indonesian approval sequence.

For every unresolved item, record its owner, expected resolution date and effect on cost or timing. A submission receipt should not be treated as evidence that an approval has been granted.

Connect the Feasibility Findings to the Indonesian Entity

Once the project roles are clear, identify which company will develop the property, hold eligible rights, contract with the operator, employ staff and receive revenue. That exercise gives the entity and activity review a concrete scope.

PP No. 28 of 2025 provides the risk-based business licensing framework. The resulting permissions depend on the actual activities and project location. InvestinAsia’s hotel and resort investment guide via PT PMA covers structure, capital and hotel licensing in greater depth.

If the development thesis holds but the company scope remains unsettled, review the proposed activities before incorporation. InvestinAsia’s PT PMA registration service covers the entity setup route; site, technical and operating matters still need their own project review.