Indonesian tourism ready and waiting for business<\/p>\n
By Tantri Yuliandini<\/p>\n
JAKARTA (JP): People tend to look back at the 1990s as the
\ngolden years of Indonesian tourism.<\/p>\n
And no wonder -- with tourist arrivals steadily growing at an
\naverage rate of 16 percent and bringing in as much as US$6.3
\nbillion in 1996, tourism then was certainly a gold mine for
\nprospecting foreign exchange.<\/p>\n
In terms of revenue, tourism moved from Indonesia's 12th
\nlargest industry to fifth, and was originally targeted to be the
\ncountry's third largest industry between 1997 and 2002.<\/p>\n
Then catastrophe struck.<\/p>\n
As Indonesia was sucked into the morass of the Asian economic
\ncrisis, the tourist industry was inevitably pulled down along
\nwith it.<\/p>\n
An industry vulnerable to change, tourism plunged into its
\ndarkest hour when the country was ravaged by political upheavals,
\nriots and an atrophic economy.<\/p>\n
Although not quite hitting the bottom, it recorded growth of
\nonly 2.99 percent in 1997 (5.2 million visitors) and sank to
\nminus 11.16 percent in 1998 (4.6 million visitors).<\/p>\n
More resilient than other industries, perhaps, it swung back
\nin 1999 to record growth of 2.63 percent, with 4.72 million
\ntourist arrivals and $4.71 billion in foreign exchange.<\/p>\n
Hopes ran high in 2000, the year of the Golden Dragon,
\nconsidered the most auspicious year for business by the Chinese.<\/p>\n
As is often the case, however, the reality is that not all
\nthat glitters is gold.<\/p>\n
Incessant fighting in Maluku and Aceh, along with bomb blasts
\nin several parts of Jakarta, have held back a resurgence in
\ntourist arrivals in the country.<\/p>\n
The first nine months of the year only saw 3.7 million
\nvisitors, and it is unlikely that arrivals will reach the 5.1
\nmillion targeted at the beginning of the year.<\/p>\n
Even the minister of culture and tourism was pessimistic about
\nreaching the target.<\/p>\n
In his report to the coordinating minister for the economy in
\nOctober, I Gede Ardika said it was almost impossible for the 2000
\ntarget to be achieved.<\/p>\n
It would take 381,624 visitors a month for the tourist
\nindustry to be able to meet the target, he said, adding that it
\nwould mean an increase of at least 9 percent in each of the
\nremaining months.<\/p>\n
\"The fact that average growth during the first eight months
\nonly reached about 4 percent (means) there is very little chance
\nthe year 2000 target can be reached,\" Ardika said in his report.<\/p>\n
On top of that, the anti-American sweep of hotels in
\nSurakarta, Central Java, in late October effectively quashed the
\nslim hopes of more arrivals.<\/p>\n
The U.S. government subsequently slapped a travel warning on
\nIndonesia, and in the weeks after some 800 tourists from the
\nUnited States and Europe canceled their trips to the country.<\/p>\n
Chairwoman of the Association of Indonesian Tour and Travel
\nAgencies (ASITA) Meity Robot said the number of foreign tourists
\nto Surakarta, which is also known as Solo, dropped significantly
\nfollowing the sweep.<\/p>\n
At least two American charter flights and two cruise ships
\ncarrying about 1,600 passengers canceled their plans to disembark
\nin Central Java, she said.<\/p>\n
\"There were more but I can't remember them all,\" Meity added.<\/p>\n
\"The chief of ASITA's executive board in Solo informed me that
\nthere were many hotel rooms empty in the city, and that many
\ntourists had canceled their tour plans.\"<\/p>\n
The travel warning issued by the U.S. government also
\ninfluenced European tourists intending to visit Indonesia.<\/p>\n
Chairman of the Indonesian Hotel and Restaurant Association
\n(PHRI) Pontjo Sutowo said a travel warning would inevitably
\naffect tourist arrivals to the country.<\/p>\n
He said in some countries, a travel warning was treated as
\nlaw, banning the country's citizens from traveling to the nation
\nin question.<\/p>\n
\"In Japan for example, if someone sells tourism products of a
\ncountry against which a travel warning was issued, that person
\nwould be considered to have broken the law.\"<\/p>\n
He said even though the United States only issued a warning,
\nand not a ban, its effects would be far-reaching unless it was
\nquickly revoked.<\/p>\n
The success of the Tourism Indonesia Mart and Expo (TIME) in
\nSeptember had, for a time, buoyed confidence that the year-end
\ntarget would be achieved.<\/p>\n
The event secured about $9.5 million worth of contracts, an
\nincrease from last year's $8.7 million.<\/p>\n
\"But as soon as the event ended, there was the Jakarta Stock
\nExchange bomb blast,\" Meity said.<\/p>\n
Hotels<\/p>\n
As with the number of tourists, hotel businesses are also
\nfacing stagnant growth this year.<\/p>\n
According to PricewaterhouseCoopers in its third quarter issue
\nof Jakarta Property Trends, the occupancy rates of hotels in
\nJakarta reached approximately 38 percent for five-star hotels, 46
\npercent for four-star hotels and 62 percent for three-star
\nhotels.<\/p>\n
It is a brighter picture than the second quarter figures of 32
\npercent, 41 percent and 56 percent respectively, and the record
\nlows of 26 percent, 27 percent, and 37 percent during the second
\nquarter of 1999.<\/p>\n
But it is a far cry from the precrisis levels, when all three
\nstar levels recorded occupancy rates of more than 60 percent.<\/p>\n
Overall, the occupancy rate of hotels in 13 provinces between
\nJanuary and July averaged 43.41 percent, according to data from
\nthe Ministry of Culture and Tourism.<\/p>\n
The provinces are North Sumatra, West Sumatra, Jakarta, West
\nJava, Central Java, Yogyakarta, East Java, Bali, North Sulawesi,
\nSouth Sulawesi, East Kalimantan, Riau and West Nusa Tenggara.<\/p>\n
On the island of the gods, Bali, however, tourism sings a
\ndifferent tune.<\/p>\n
If occupancy rates of hotels could be used to measure the
\nsuccess of tourism in a region, Bali, with its rate averaging
\nmore than 60 percent, has seemingly escaped the wrath of the
\ncrisis.<\/p>\n
\"Bali's image (as a tourist destination) had been established
\na long time ago, and tourism has merged with Bali's way of life,\"
\nPontjo explained.<\/p>\n
In fact, the development of tourism in Bali is nothing short
\nof remarkable.<\/p>\n
Making its debut as an international tourist destination in
\nthe 1920s, the number of Bali's foreign visitors grew from 10,997
\nin 1968 to 155,597 in 1993, and soared to 1.14 million in 1996.<\/p>\n
While the rest of the country suffered from a dearth of
\ntourist arrivals during the crisis, the island recorded 1.35
\nmillion tourists coming directly from foreign ports in 1999.<\/p>\n
Pontjo said another reason for Bali's survival was that during
\nthe heat of the crisis it tended to disassociate itself from the
\nrest of Indonesia. It was a case of Bali standing alone, not
\nBali, Indonesia.<\/p>\n
At international travel marts, Bali would have a separate
\nexhibition booth from the Indonesian contingent.<\/p>\n
\"For a long time Bali was not known to be a part of Indonesia,
\nso it is easy for it to disassociate itself,\" he said.<\/p>\n
Pontjo, who is also the chairman of the Indonesian Tourism
\nPromotion Board (BPPI), takes a sober view of the situation of
\nthe hotel business.<\/p>\n
\"All in all, 2000 was better than 1999, but compared to 1996,
\nour peak year, we are still 25 percent behind,\" he said.<\/p>\n
Development in the hotel sector came to a virtual halt as the
\ncrisis intensified.<\/p>\n
In 1997 there was a total of 18,100 hotel rooms in three to
\nfive-star hotels in Jakarta. During the three years of the
\ncrisis, 2,300 additional rooms were built, compared to about
\n1,200 rooms built in 1991, 1,500 rooms in 1976 and 1,900 rooms in
\n1974.<\/p>\n
The credit crunch ensured suspension of construction of more
\nthan 5,000 rooms from the 6,500 previously planned, according to
\nPricewaterhouseCoopers.<\/p>\n
\"In view of the quantity of speculative overbuilding which had
\nbeen planned in the hotel sector, the sudden stop to development
\nmight be seen in some ways as fortuitous for the hoteliers,\" it
\nsaid.<\/p>\n
\"They nevertheless had to suffer the effects of the business
\ndownturn which shattered occupancy and room rates.\"<\/p>\n
In the past, hotels quoted room rates in U.S. dollars which,
\nbecause of the rupiah depreciation, meant a 60 percent to 175
\npercent increase in equivalent rupiah rates, further decreasing
\naffordability and guest numbers, the company said.<\/p>\n
\"Hoteliers were forced to lower their room rates in dollar
\nterms,\" Pontjo said.<\/p>\n
Five-star hotels reduced their average room rates by 34
\npercent to $74 from $120 between 1997 and 1999. Most three-star
\nand four-star hotels now quote room rates in rupiah, effectively
\nseeing a reduction of around 60 percent from 1997 to 1999.<\/p>\n
\"Average room rates had fallen to an equivalent US dollar rate
\nof $34 and $20 for four-star and three-star hotels, respectively,
\nby mid-1999,\" PricewaterhouseCoopers said in its report.<\/p>\n
Many hotel operators tried to attract guests by offering hotel
\nmemberships which would allow discounted hotel facilities.
\nSpecial weekend packages for local residents, and business and
\nseminar packages were also put on the platter, it said.<\/p>\n
Even with lower prices and special packages, customers were
\nnot attracted because there were other external factors that made
\nthem unsalable, Pontjo said.<\/p>\n
\"Hoteliers are now operating below breakeven point, and if
\nthis goes on for any longer the industry would collapse,\" he
\nsaid.<\/p>\n
Conventions<\/p>\n
Since the tourist industry is not bringing in much revenue for
\nhotels, especially in Jakarta, an increasing number of hoteliers
\nare casting a hopeful eye at the meetings, incentives,
\nconventions and exhibitions (MICE) industry this year.<\/p>\n
Although the business is still not particularly attractive
\nto foreigners, hotels did fairly well in providing space for
\nmeetings and conventions, while the exhibition segment was
\npretty much taken by the Hilton with its Jakarta Convention
\nCenter located close to the business district.<\/p>\n
Marketing vice president of hotel operator PT Hotel Indonesia
\nNatour Tjuk Sumarsono said income from conventions and meetings
\ncontributed about 40 percent of the earnings of hotels under his
\nsupervision this year.<\/p>\n
Hotel Indonesia Natour manages 16 hotels in Java and Bali,
\nincluding Hotel Indonesia, Indonesia's oldest international
\nstandard hotel.<\/p>\n
\"For now meetings and conventions are still dominated by
\ngovernment and local business clients,\" Tjuk said, adding that in
\nthe future his hotel chain would continue to focus on MICE.<\/p>\n
Chairman of the Indonesian Congress and Convention Association
\n(INCCA) Iqbal Abdullah said the potential in generating revenue
\nfrom MICE was staggering.<\/p>\n
\"The income from MICE could reach as much as five times the
\nincome from conventional tourism,\" he said.<\/p>\n
Those attending MICE events usually stay for at least five
\ndays and spend about $500 a day compared to only $100 a day from
\nconventional tourists, Iqbal said, adding that at least 500
\nparticipants could be expected at an event.<\/p>\n
Despite the great potential, the MICE industry has not
\nflourished as expected in Indonesia.<\/p>\n
This was partly due to a shortage of professional convention
\norganizers (PCOs), Iqbal said.<\/p>\n
In the entire country, there are only 34 companies catering to
\nthe MICE industry, he said.<\/p>\n
It's a classic case of the chicken and the egg.<\/p>\n
The industry does not flourish because of the lack of
\nprofessionals, and the lack of professionals in the field is
\ncaused by a lack of demand for the events.<\/p>\n
In 1998, only 0.51 percent of the 4.6 million visitors coming
\ninto the country came for conventions, but 46.5 percent came for
\nbusiness purposes.<\/p>\n
Most companies still prefer organizing their own meetings and
\nconventions to hiring professionals to organize them, Iqbal said.<\/p>\n
\"Out of 945 MICE events held in 1997, less than 100 events
\nwere organized by professional event organizers,\" he said.<\/p>\n
Iqbal regretted the government's lack of attention to the
\nindustry, claiming that it should have promoted the industry by
\nputting PCOs in charge of organizing the Inter-Parliamentary
\nUnion meeting held in October, rather than assigning it to a
\nnational committee.<\/p>\n
Future<\/p>\n
The future holds hope of a better world for many of us. For
\nthose in the tourist industry, it holds the hope of an
\neconomically and politically stable country.<\/p>\n
But the hope hinges largely on the government's ability to
\nimprove the country's image in the eyes of the world.<\/p>\n
One of the Ministry of Culture and Tourism's roles in the
\nindustry is to help promote Indonesia as an attractive tourist
\ndestination.<\/p>\n
\"It's my job to create an image of Indonesia that is
\nbeautiful, safe and appealing,\" Ardika said.<\/p>\n
The industry, on the other hand, is promoting Indonesia
\nthrough its hotels and package tours.<\/p>\n
Yet the efforts, however extensive, cannot be successful
\nunless the environment supports it, the deputy minister for
\nmarketing and international relations, Udin Saifudin, said.<\/p>\n
\"Tourism cannot move forward on its own without the support of
\nother factors such as security, accessibility and the economy,\"
\nhe said.<\/p>\n
While the 2001 state budget for tourism may be small compared
\nto that of other countries, the ministry will concentrate on
\npromoting Indonesia in international travel marts and inviting
\ntour operators to come and see for themselves the state of the
\ncountry, Ardika said.<\/p>\n
A limited budget, however, would force the ministry to focus
\nits promotion on Indonesia's major markets, such as the member
\ncountries of the Association of Southeast Asian Nations (ASEAN),
\nthe Asia Pacific region and Europe.<\/p>\n
\"The potential for the Indonesia tourist industry is very
\nlarge and it isn't just a hypothesis as it has been proven
\nbefore,\" Pontjo said<\/p>\n
The questions to ask now, he added, were how did Indonesia do
\nit before -- and how will it be able to do it again.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesian-tourism-ready-and-waiting-for-business-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}