Fri, 22 Dec 2000

Bali needs all 'classes' of tourists

By Rob Goodfellow

WOLLONGONG, Australia (JP): Bali Governor Dewa Made Berata made the very reasonable statement in November that he wanted to attract more high-spending, "value-added" tourists to the island. The governor's comments were unfortunately interpreted as a direct criticism of Australia and Australians, who for nearly three decades have made up the vast bulk of package and budget visitors to Bali.

The governor's perceptions also were interpreted as a singular endorsement of Japanese visitors. This was because anecdotal evidence suggests that as a group, the Japanese exhibit particularly generous spending patterns.

Rather than concentrate on the vitriolic response of the Australian press (with headlines such as Aussies in Bali Not all Drunk and Cheap), which only served to further the debate rather than resolve it, the governor's comments actually deserve a scientific response. More knowledge is required about the individual consumer segments that make up the internationally recognized phenomenon we know as "Bali". For instance, are all Australian travelers the same? Are all Japanese visitors to Bali big spenders?

Bali presently commands about 8 percent of the world tourist market, valued globally at US$100 billion a year. Since the high point of the mid-1990s tourist boom, the island has unfortunately been in slow decline as a holiday destination. This was mostly a result of the Asian economic crisis. It was also an unfortunate consequence of political instability in Jakarta and its perceived impact on Bali.

At this point it is worth mentioning that when most European, American and Japanese holidaymakers abandoned Bali in early 1998, the Australians kept coming, albeit precisely because Bali was a "budget destination".

And out of interest, riots in Jakarta usually fail to rank a mention in the world press, while any disturbance in Bali, no matter how relatively insignificant, is reported as newsworthy.

The good news for Indonesia has been that the downward trend has recently reversed.

The latest report by the Australian Bureau of Statistics (ABS) shows the number of Australian visitors to Bali has risen dramatically in the last three months. An examination of these statistics do, however, reveal marked differences in "types" of Australian visitors to Bali. And rather than confirm stereotypes, the following examples indicate prima facie that the market is actually very complex.

For example, Dr. Simon Leslie and his wife Margaret have taken their three children -- Brendan, 16, David, 12, and Alexander, 3 -- to Bali twice. They stay at world-class five-star hotels, such as the Intercontinental at Jimbaran Bay. This family's holiday spending patterns reflect Dr. Leslie's professional income.

Bill and Madge Carey have been to Bali three times. The span of their visits keeps getting longer. Their first holiday was for 10 days, the second for two weeks and the third over three weeks. The couple will be retiring soon and plan to spend two months of every year in Bali.

Bill and Madge represent a growing number of Australian retirees, "baby boomers", who anecdotally plan to spend the cold and windy eastern Australian winter of June to August in milder climes. This group is typically financially independent, and they represent important business for Bali. They do not "scrimp" on comfort. They guarantee solid custom for the boutique or bungalow-style accommodation market, particularly in and around Legian Beach.

The final group may be closer to what Governor Berata was suggesting in terms of their "shoestring" spending patterns. Neville Cruckshank is 30. He is a self-confessed "budget" tourist and stays in the cheapest losmen (boardinghouses). Notwithstanding, he has been to Bali 10 times and will likely visit another 10 times. Visitors like Neville represent important repeat business for the bottom end of the market. The Neville Cruckshanks of this world may not spend a lot on a single holiday, but when their frequent trips are averaged, particularly over a lifetime, even the airfare component to Garuda (Neville's preferred airline), not to mention the departure tax at Ngurah Rai Airport, becomes significant.

In contrast, most Japanese workers do not have the same holiday entitlements as their Australian counterparts, who receive an average of six weeks annual leave. Japanese workers on the other hand receive only two weeks holiday a year and typically "donate" one week back to their company. And unlike the Australians, they spend in short bursts. But do they come back like the Australians? What about the thousands of young Japanese surfers who visit the island every year. Are they big spenders, too? Or are they just like Neville Cruckshank and have a budget to consider?

Last month the director of Australian-based IRIS Research, Martin O'Shannessy, predicted a 30 percent increase in Australian tourists bound for Bali. This was later confirmed by ABS. As a market research expert, what are O'Shannessy's thoughts about Bali?

"While Bali is a destination, it is actually one of the world's best recognized tourism brands," said O'Shannessy.

"It is just like any product. When people come to Bali they are purchasing a commodity. In the case of Australians there is some evidence that most of the traffic is repeat business. As with any brand, the best customer is the one you already have. Garuda, for example, understands this concept well. They market the 'destination rather than the journey', because they know that most of their passengers know exactly what to expect when they arrive."

O'Shannessy added: "The problem is that existing research does not tell us a great about the broad demographic data. At the most fundamental level understanding brands is about understanding consumer patterns of behavior. In fact it is finding out who people are, what they want, and then giving them a lot of it and then getting them to pay for the added value.

"The Sanur-based Bali Adventure Tours has proven this. They have been very successful in developing products that people actually want. White-water rafting, the elephant safari park, helicopter rides and so on. In fact, more than this, they have identified that different market segments want different things. This brings guests back. It strengthens the relationship between the visitor and the brand. It ensures that overseas guests of every 'economic category' continue to contribute hard currency to the economy of Bali and to the whole of Indonesia year after year."

The curious thing about Bali is that it appears that there is very little known about how nationalities differ from each other in terms of their spending patterns there. What are their expectations? What pleases them? What brings them back? And how homogeneous are these national groups? In view of the governor's comments, and the Bali Adventure Tour experience, I could also add, what other services are guests prepared to pay more for?

The general manager and director of operations for Bass Hotels and Resorts Indonesia, Rolf Hubner, recently told this writer that his market mix for the Bali Intercontinental was 30 percent Japanese, 25 percent Asians (including 8 percent Indonesian nationals), 20 percent Europeans, 15 percent Australians and 10 percent Americans.

The 15 percent Australian group, represented above by the Leslie family, certainly deserves the attention of market researchers like O'Shannessy, but so do the medium-range and budget travelers.

Two decades ago government planners in Denpasar decided that Kuta was to be developed as a budget destination, Nusa Dua reserved for mass, medium-range package holidays and Jimbaran, Sanur and Ubud "quarantined" as a retreat for more upmarket visitors. I believe that it is time to further develop this inclusive strategy and better understand how the Bali tourism market actually operates. This can only be done by scientifically measuring sentiment, accommodation preferences, spending patterns, satisfaction indexes and so on.

Further, we need to appreciate that elite, mid-range and budget holidaymakers each have an important role to play in ensuring the long-term viability of Bali as one of the greatest places on the planet for anyone to go on holiday.

Rob Goodfellow, a writer and Indonesian cultural consultant to international businesses, is based at the University of Wollongong. He can be contacted at