Bali tourism industry faces bankruptcy

Rita A. Widiadana and I Wayan Juniartha, The Jakarta Post, Denpasar, Bali

July to August is usually the peak season for the tourism industry on the island of Bali with thousands of foreign tourists enjoying the beauty of its beaches, rich culture and natural resources. That was a sweet thing of the past.

The present state of Bali, previously renowned as one of the world's favorite tourist destinations, is dismaying. In terms of nature and culture, Bali remains almost the same as it was. But, the global and local conditions, including wars and a deadly viral outbreak, have turned foreign visitors away. Ni Nyoman Atini, owner of a hostel and a fashion boutique in Kuta, was pessimistic.

"I haven't seen any good signs of visitors returning to Bali since the bombing tragedy in October," Atini said. In the past few years, thousands of rich tourists as well as backpackers would crowd Kuta, Sanur, Nusa Dua and other holiday destinations in Bali between July and September.

Bali's Ngurah Rai international airport received at least 5,000 foreign visitors a day during the peak season. Annually, Bali received around 2 million foreign visitors. Today, only 1,600 foreign visitors arrive daily. For Bali's tourism industry, which has more than 42,000 hotel rooms, thousands of restaurants and other supporting facilities, such a number of tourism arrivals would cripple their businesses.

"How can they fill our abundant hotel rooms," said a hotel operator in the upmarket Nusa Dua resort area. The year 2003 will be the worst period for the Bali tourism industry, which has been hit by a series of tragedies since the terrorist attack in New York, including the Bali bombing and the devastating Severe Acute Respiratory Syndrome (SARS) outbreak.

I Gede Pitana, head of the Bali Tourism Office, explained that the current situation had forced all stakeholders in Bali to work extremely hard. "Actually, many of us have run out of energy to face these unpredictable conditions. Yet, we have to remain optimistic," Pitana admitted. Owners and operators of hotels and restaurants in Bali have frequently called on both the provincial and central governments to take immediate action to help support their ailing businesses.

I Gede Wiratha, chairman of Bali's chapter of the Indonesian Hotel and Restaurant Association (PHRI), said the majority of the association's members were now on the brink of bankruptcy. "Some of them have temporarily halted operations due to high operation costs," he said. A few weeks ago, the four-star hotel Gran Mirage in Benoa, around five kilometers south of Nusa Dua, stopped operations because of financial constraints.

Gran Mirage, which employed more than 300 workers, did not say when it would resume its operations. Wiratha said there would be more hotels and restaurants in Bali, which will follow the Gran Mirage's lead or collapse sooner or later. "A lot of hotels, both star and non-star ones, have actually applied certain regulations that allow or probably force their workers to take their annual and unpaid leave to reduce their operation costs," added Wiratha who owns several hotels and bars, including Paddy's in Legian, Kuta, which was bombed on Oct. 12, 2002.

A number of travel agencies have also closed or moved to smaller and modest offices in order to cut costs. A lot of the agencies have sold part of their property to pay monthly salaries. Such a worsening condition of tourism-related businesses in Bali will certainly have a gigantic impact on the island's social and economic condition since tourism has been the economic pillar for the last four decades.

"Can you imagine if all hotels and restaurants closed? I feel really afraid of the possibility of social unrest on the island," he commented. According to the provincial government data in 2002, of the about 3.5 million people living in Bali, 1.3 million people's work was connected to tourism. As many as 720,000 people are directly employed by tourism, including in hotels, restaurants, travel agencies, transportation and catering services.

I Gusti Agung Prana, chairman of the Bali chapter of the Association of Travel Agencies (ASITA), admitted that many of the association's members, which count for more than 400 companies, have been unable to resume operations since Bali was attacked last year. The condition worsened with the outbreak of the Iraq War and the SARS virus, which have crippled the tourism industry in Asia.

"After the bombing tragedy, we have still received booking orders from our partners, especially from Europe, Taiwan and even from Australia despite the travel advisories," Agung Prana said. He said that business partners in overseas countries had begun to forget the bombing tragedy and had tried to arrange tours to Bali. "Last March, we received significant numbers of inquiries," Agung Prana said.

However, the outbreak of SARS had changed expectations. "We are all finished now," he said desperately. He predicted that if the situation was still stagnant at the end of 2003, Bali's tourism industry would be totally ruined.

People in the local tourism industry have desperately sought help from the government and banks. They say the government has been reluctant to respond to the crisis. "It is time for the government to help us."

They can facilitate fresh loans, debt rescheduling or other efforts to support the Bali tourism sector," Agung Prana said. He said Bali deserved the attention and assistance from the central government since the province's tourism sector contributed more than 30 percent of Indonesia's estimated U$5.74 billion revenue from the tourism sector. Pitana, however, said the Bali government had asked tourism players to submit proposals for a tourism recovery program.

"After the proposals are complete, then we can make a blueprint for creating effective recovery programs," Pitana said. It seems, however, that the people working in the tourism sector cannot wait until the blueprint is completed.

"We are dying thinking thousands of employees will soon lose their jobs. We don't need anymore proposals. We need action and fresh funds to keep the island's economy going," Wiratha said.