Bali tourism industry faces bankruptcy

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.