Finding new synergy to restore tourists' confidence

Finding new synergy to restore tourists' confidence

Satyasuryawan, Contributor, Jakarta

Is Indonesian tourism heading toward its nadir? Well, quite a
number of people would not readily agree with this assumption.
However, no one would dispute the fact that the recent Bali
bombing has severely tarnished the image of tourism in Indonesia.
Within a couple of hours of the tragedy, thousands of tourists
had to shorten their stay in Bali as suddenly their moments of
joy on the island of the Gods were disrupted. In fact, the entire
nation suffered a greater loss than that experienced by these
foreign tourists.

The material losses are crystal-clear. Occupancy rates in a
variety of star-rated hotels in Bali have drastically gone down.
One extreme example is a five-star hotel, with hundreds of rooms,
that had only four guests during a certain recent weekend.

Incoming tourists to Bali and even other destinations of
Indonesia have postponed their plans and many have canceled their
confirmed tour bookings. Orders for Balinese souvenirs have
dwindled also, due to a reduction in demand from the regular
importers.

However, given the wise words, "Every cloud has a silver
lining", one must regard the Bali bombing as an "unfortunate
incident", although it has claimed more than 180 innocent lives.
It is a kind of a most unexpected tragic incident that nobody
could have foretold.

This tragedy ought to boost the spirit of synergy among the
various sectors in the tourism business, which, in fact, have a
related interest. Hotels, airlines, restaurants, entertainment
and recreation spots, as well as travel agencies have to work
together in the marketing chain of tourism. "None of us can do it
alone, we have to cooperate with each other," said chairman of
Association of the Indonesian Tour and Travel Agencies (ASITA)
Meity Robot.

Meity's remark is not without grounds. Travel bans issued by
various countries -- mostly Western -- have added to the burden
on our tourism. The tourism sector, as we know, is the third-
largest contributor to our country's gross domestic income.

Apart from the diminishing number of foreign tourists, it is
also now becoming more difficult for Indonesians to travel abroad
to certain countries, such as the U.S. and several other
countries, due to restrictions on the issuance of visas for
business or leisure trips.

Currently there seems to be no other choice for the tourism
industry other than targeting the domestic market, as in reality
it is still a major one. According to data collected by the
Indonesian tourism and cultural development body, at least 120
million Indonesians travel annually around the country.

Travel agents are already offering special tour packages to
Bali at specially discounted rates. The major national airline,
Garuda Indonesia, has cut its rates by 30 percent. A number of
five-star hotels on the island are also offering their rooms at
two-thirds of their normal rates. All these offers are obviously
made in the hope that a greater number of domestic tourists might
be attracted to Bali.

Unfortunately these discounts will not last for long. Garuda's
discounted rates are valid only to November 20, while Merpati
Nusantara's last until November 27. Some of the hotels have
converted their rates to rupiah to the end of the year, but some
others are adding a surcharge of about Rp 500,000 per night for
the Christmas and New Year periods. Year-end holiday packages are
still exorbitantly priced. It seems that the recent tragedy,
which has claimed hundreds of victims, has quickly been
forgotten. "There should be a longer recovery program, more so
than the current one," added Meity.

Probably such short-term or crash programs have emerged after
learning from recent experiences. Even after the 1997 economic
crisis the middle- and upper-income groups in society have not
suffered too much. Malls are still crowded. New cars congest the
cities's streets. Those dealing with the domestic tourism
business have based their assumptions on such typical situations.
Those who can afford to travel for leisure are assumed to have
extra funds and be relatively unaffected by the economic crisis.

Ironically, the domestic market has yet to earn the respect
and attention of the tourism industry, as local tourists have not
become "the masters in their own country". The cash registers of
travel agencies, however, contain a larger contribution from the
international market in comparison to that coming from the local
business.

The following serve as examples. The annual financial report
of PT Anta Express Tour & Travel Service Plc. as per December 31,
2001, indicated that the profit contribution from domestic ticket
sales was Rp 2.3 billion, while from international ticket sales
it was Rp 7.5 billion. Inbound tours produced a Rp 2.5 billion
profit and outbound tours brought in a larger profit: Rp 5.6
billion. Before the Sept. 11 tragedy, Anta's profit for 2000 from
outbound tours reached Rp 11.8 billion, while its international
ticket sales were around Rp 15 billion. Since the terrorist
attacks in the U.S., tourism companies have focused more on the
domestic market and the 2001 contribution for inbound tours
rapidly increased in comparison to the previous year, which was a
losing business in this segment.

Other major travel agents, such as Panorama Sentrawisata and
Wita Tour, are also having similar experiences. It is not
surprising, therefore, to find numerous advertisements that offer
holiday packages to a variety of foreign destinations.

The larger profits from this smaller segment could be the
reason why the domestic market has been neglected. Several
airlines and hotels claim that the discounts they are offering
cannot last for long as they would affect their operational
costs. Unfortunately, this statement is slightly in contradiction
with current realities: the tours offered by foreign travel
agents. Just take a look at these low rates: US$160 (about Rp 1.4
million) for two nights in Malaysia, including airfare and
accommodation in a star-rated hotel, plus meals and tours to
tourism resorts, while eight nights in Australia with similar
facilities are only US$1,052.

These rates are similar to the special offers made by Garuda
Indonesia in conjunction with some travel agents in the recovery
effort for Bali tourism in the post-bombing period. A two-night
package at a star hotel with breakfast, including airfare, is
priced at between Rp 1.4 and Rp 1.8 million. Under normal
circumstances, it is usually 30 percent to 50 percent higher.

This, again, illustrates how inefficient or costly the local
tourism industry is. The rates for these special offers could be
assumed to be equal to the marginal costs borne by the related
businesses in the tourism industry. On the other hand, it appears
that the profits reaped during normal conditions are just too
high. Or probably there is a lot of inefficiency involved in the
entire chain of marketing, for example the "unofficial fees",
"lobbying costs", "guarantee money" and many other unauthorized
payments.

The greater focus on the foreign market is probably due to
government policies that have not fully supported domestic
tourism. Such policies have to converge with every type of
business dealing in the tourism industry or else we could lose
out to other countries. With AFTA 2003 just around the corner,
most Asian countries, such as Malaysia, Thailand and even
Cambodia, have placed the greatest importance on tourism and
treated it as the backbone of their economies. This sector has
proven to be quite rewarding for both Malaysia and Thailand
throughout the economic crisis since 1997.

Indonesia, on the contrary, has closed down its overseas
tourism promotional offices during the economic crisis, while
Malaysia has increased such offices from 12 to 30. As of now,
quite a number of tourist resorts in Indonesia have not been
managed in synergy with the other links in the chain: hotels,
restaurants and transportation companies.

Almost everyone, including many foreigners, agree that
Indonesia has a valuable treasure: natural beauty throughout the
archipelago, among other things. However, what is lacking is
effective promotion. Other types of package should also be
created, such as new domestic destinations, shop 'n' leisure
packages, ecotourism or ethnotourism, all with the aim of
enriching Indonesian tourism.