Travel downfall: Big players suffer more<\/p>\n
Grace Emilia, The Jakarta Post, Contributor, Jakarta<\/p>\n
Talking about the hotel market situation in Indonesia means
\ndiscussing the ripple down effect of globalization, particularly
\nafter the Sept. 11 terrorist attack in America.<\/p>\n
The attack has sent the world airline industry into the
\ndoldrums. Prior to the tragedy, the decline in the global economy
\nhad led the International Air Transport Association (IATA) to
\npredict losses for all carriers of US$2.5 billion until the end
\nof this year. But after the WTC attack, IATA has increased its
\nprediction to $10 billion.<\/p>\n
The attack has been translated worldwide into massive
\nfinancial losses, layoffs and cutbacks for airlines around the
\nglobe.<\/p>\n
U.S. airlines alone have responded by cutting 120,000 jobs and
\nreducing flight schedules by an average of 20 percent as both
\nbusiness and leisure travel have dropped off sharply.<\/p>\n
This fallout extends from air travel to other associated
\nsectors, including the cruise, hotel, convention planning and
\nfood service industries.<\/p>\n
The U.S. Chambers of Commerce warned in early October that
\nmore than 1 million workers in the hospitality industry would
\nlose their jobs within weeks.<\/p>\n
In Indonesia, the impact is probably less severe but is still
\nvery harsh. According to State Minister of Culture and Tourism I
\nGede Ardika, Indonesia will most probably lose 1.6 million
\nprospective tourists and nearly US$2 billion in foreign exchange
\nthis year due to the war in Afghanistan.<\/p>\n
In Bali, the number one indicator of this country's tourism
\nindustry, the MICE (Meeting, Incentive, Conference, Exhibition)
\nbusiness is the one that is most affected.<\/p>\n
"It is dropping terribly," said I Gusti Bagus Yudhara,
\nChairperson of ASITA (Association of Indonesian Tour and Travel
\nAgencies) Bali.<\/p>\n
But hoteliers from the upmarket hotels which are often used
\nfor MICE business are, however, still optimistic that this
\nparticular segment will pick up again over the next two years.<\/p>\n
"The incentive market needs one year in advance planning, so
\nit certainly will be going down next year. But hopefully it will
\npick up again by 2003," said Craig Senior, Director of Sales &
\nMarketing for the Jimbaran-based Ritz Carlton Bali Resort & Spa.<\/p>\n
Marc F. Dardenne, General Manager of the Ritz Carlton Bali
\neven sees a silver lining.<\/p>\n
"Yes, we are losing the incentive and conference market as
\nthey are mostly from the U.S., but we getting individual markets
\nfrom Japan which usually go to Hawaii or Guam. They are now
\nheading to short-medium haul destinations like Bali to avoid long
\nflights.<\/p>\n
So we lost 15 percent, but will still get 5 percent back,"
\nDardenne said.<\/p>\n
Japan, as the medium-haul market, is hoped to be one of the
\npotential markets that will sustain Indonesia's inbound tourism.<\/p>\n
"We are now focusing our marketing orientation on short- and
\nmedium-haul markets in East Asia like Japan, South Korea and
\nChina, also Singapore, Malaysia, Brunei and Australia," said I
\nGede Ardika recently.<\/p>\n
However, even Japan's largest travel agent, the Japan Travel
\nBureau, stated that bookings for all international trips for
\nOctober and November 2001 were down between 10 percent and 15
\npercent from the same period last year.<\/p>\n
But the opportunity for business should be grabbed, however
\nsmall it is.<\/p>\n
Thus Rio Kondo, director of the Horwath Asia Pacific Jakarta
\nRepresentative Office, a tourism consulting company, warned that
\nthe (tourism) industry in Bali should be very careful in
\nmaintaining the security issue, especially for the Japanese
\nmarket, which is very security-oriented.<\/p>\n
"Up to August this year, hotels in Bali were still enjoying
\nboth a good occupancy rate and an average selling rate. Ever
\nsince the beginning, Bali has not been much affected by the
\ncrisis. Their ebb and flow in occupancy rates depends mostly on
\nholiday seasons.<\/p>\n
However, after this September, Bali has started receiving
\ncancellations. Yes, the American market is not very influential
\nas there are not many of them. But the problem could be derived
\nfrom the Japanese market which is very conservative in security-
\nrelated matters," said Kondo, who is also the Chairman of
\nResearch and Investment of the Indonesian Hotel & Restaurant
\nAssociation (IHRA).<\/p>\n
Meanwhile, regarding Jakarta hotels, according to Kondo the
\nnegative impact is obvious because many of the businesses in
\nJakarta are somehow related to U.S. and European companies.<\/p>\n
"We divide the hotel market situation into three levels: top
\ntier, mid tier and low tier. Regarding the recovery side, the low
\ntier hotels are the ones that recover quickly, because most of
\ntheir market is domestic. Up to August this year, their occupancy
\nrate had almost reached 60 percent.<\/p>\n
Meanwhile, the mid tier hotels are not very bad either as
\ntheir market is mainly domestic and regional. Their occupancy
\nrate has been reaching 50 percent.<\/p>\n
It is the top tier hotels which suffer the most as the
\nmajority of these cater to the international market. The selling
\nrate of these top tier hotels is only around $80, while actually
\nthey should sell at above $100. In 1997, their selling rate was
\nalmost $140," explains Rio Kondo.<\/p>\n
Paying attention to the domestic market is one solution
\nsuggested by Kondo though this market's buying power will not be
\nas big as the international one.<\/p>\n
Indonesia's Santika Hotels Group has foreseen the potential of
\nthis domestic market.<\/p>\n
"We are surviving because most of our hotels cater to the
\ndomestic market," said Rudy Setiawan, Corporate Director of
\nMarketing Santika Hotels Indonesia.<\/p>\n
"In Bali we will be losing about 20 percent of business,
\nmostly from the Europe and U.S. markets. In Manado we were
\nrunning at 37 percent in September but suddenly dropped to 23
\npercent in October. But it was also 30 percent in the same period
\nlast year. So we are only losing three percent," Setiawan
\nexplained.<\/p>\n
But in other cities, he went on, business was going on as
\nusual. In Bandung, the occupancy rate was more than 90 percent,
\nwhilst in Cirebon, Surabaya, Yogyakarta and Semarang it was more
\nthan 80 percent.<\/p>",
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