Airy, the Indonesian budget hotel startup, is shutting down its operations permanently by the end of this month, due to the COVID-19 crisis. The news was first reported by Dealstreet Asia who saw a copy of a document that the company had sent to its property partners.
Airy said that its decision to stop business activities is caused by a “significant technical decline and a reduction in human resources”. Therefore, the company will no longer provide services to all of its partners after May 31, 2020, according to the report.
KrASIA has reached out to Airy for confirmation but the firm’s spokesperson declined to comment on the matter.
Founded in 2015, Airy created a network of around 2,000 properties, with a total room capacity of 30,000 units. In an email interview with KrASIA in early April, Airy’s CEO Louis Alfonso Kodoatie admitted that Airy’s occupancy, especially in popular tourist destinations like Bali, had declined but the company was still optimistic about the sustainability of its business despite the slowdown. Kodoatie said that Airy was using the quiet time to improve quality control and services.
However, not long after the interview, Airy reportedly had to dismiss 70% of its staff.
The COVID-19 pandemic is severely hitting the entire hospitality and tourism industry in Indonesia and elsewhere. The Indonesian Hotel and Restaurant Association noted that more than 1,600 hotels have closed temporarily because of the pandemic. Given the significant decrease in occupancy rates, hotels cannot cover the expensive daily operational costs, so that they decided to stop operations and put their employees on unpaid leave. The Indonesian tourism industry stands to lose around IDR 90 trillion (USD 6 billion) in income between January and April, according to the association.