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.