Expert upbeat about tourism outlook this year

JAKARTA (JP): Hotel occupancy rates in Indonesia are expected to increase to an average of 45 percent this year, from 40 percent in 2000, if political and economic conditions improve, an expert said on Tuesday.

Director of the Institute for the Development of Information on Tourism (Lepita) Diyak Mulahela said his organization predicted occupancy rates for hotels in the greater Jakarta area would be similar to the national rate.

"Some tourist destinations, like Bali, are likely to have a higher occupancy rate than other parts of the country," he said in a seminar discussing the prospects of the hotel industry in 2001.

Diyak said that Bali had emerged from the economic crisis relatively unscathed due to its aggressive promotional activities, especially during the critical years of the crisis.

"Bali has its own travel mart, and it organizes various events to attract tourists," he said.

However, Diyak said that despite the increase in occupancy rates, there would still be about 15,000 hotel rooms empty nationwide every day throughout the year.

In terms of revenue, the increase in occupancy rates will also bring in more money to hotels in terms of rupiah, but the revenue could drop in dollar terms if the rupiah remains under pressure.

The Asian economic crisis, which peaked in 1998, has dealt a heavy blow to the country's tourism industry.

Prior to the peak of the crisis the number of foreign visitors steadily increased by about 16 percent per year, with 1997 seeing a record-breaking 5.2 million visitors.

Prior to the crisis many investors invested money in the country's hotel industry, lured by the fact that approximately 54.4 percent of foreign exchange earnings in the tourism industry came from hotels.

"Some 36.3 percent of foreign exchange is generated from accommodation revenue, while 18.1 percent from food and beverages. Ultimately those two services are provided by hotels," he said.

Also, investors were attracted by the relatively fast return on investments in the hotel sector, Diyak said, explaining that returns on hotel investment could be realized in six to eight years.

But after the crisis, hotel occupancy rates dropped to between 30 percent and 40 percent.

Sharp depreciation of the rupiah against the dollar since the middle of 1997 failed to attract visitors and in 1998 only 4.6 million visitors came to Indonesia, an 18.61 percent decrease from the previous year.

"Indonesia has become the cheapest tourist destination, yet the number of tourists has failed to pick up significantly," Diyak said.

He said the crisis had severely hit hotel businesses, leading some five-star hotels to slash their rates to as low as $44 a night, down from the usual $100 a night, in a bid to attract tourists.

Last year 5.06 million visitors entered the country at 70 points of entry, slightly down on the target of 5.1 million.

This year, Diyak said that he was optimistic the government's target of 5.4 million tourists could be reached.

He said that while the number of visitors failed to exceed the government's expected figure last year, it was still more than 6 percent higher than the 1999 figure of 4.7 million.

"Considering that every year the international tourism market continues to grow, now reaching more than 100 million people, I am sure this target will be reached," Diyak said, adding that, in the meantime, the industry should step up its promotional activities to help ensure success.

"Indonesia should keep participating in international travel events, like the travel marts in Berlin and London, to ensure that the country is not forgotten as a tourist destination," he said. (tnt)