More travel agents may close as business gets worse

Sudibyo M. Wiradji, The Jakarta Post, Jakarta

The outbreak of deadly Severe Acute Respiratory Syndrome (SARS) has dealt a major blow to the country's tourism industry. This article and the other two stories in this special page highlight the impact of the flu-like ailment on the industry.

Worldwide travel fears resulting from the outbreak of Severe Acute Respiratory Syndrome (SARS) has brought the country's travel industry almost to a standstill.

Canceled visits by foreign visitors and flight cuts by major foreign airlines have severely affected tourist activities, putting the already travel industry in its worst ever predicament.

"A number of travel agents have been forced to close their offices or lay off employees. Some have offered employees unpaid leave or reduced work hours to enable them to get through this tough time," the chairperson of the Association of Indonesian Tour and Travel Agencies (ASITA), Meity Robot, said.

She warned that if the market did not show any improvement within the next two months, most travel agencies would be forced to close their doors.

The number of foreign tourist arrivals peaked at 5.18 million in 1997 but dropped to 4.60 million in 1998 and 4.72 million in 1999, due to the combination of the economic crisis and uncertainty in security following the change in the country's leadership.

Tourism began to pick up in 2000, with foreign tourist arrivals rising to 5.06 million, but the Sept. 11, 2001, terrorist attacks halted the positive trend, with a relatively slight increase of 5.15 million foreign visitors recorded during the year. Foreign tourist arrivals plunged to 4.3 million in 2002 due to the shocking images of the Bali bombing and foreign media reports about Indonesia as a haven for international terrorist groups.

The industry saw signs of recovery in January and February of this year after the adverse effects of the Bali bombing started to wear off in people's minds.

But the recent Iraq war and the outbreak of the deadly flu- like SARS immediately reversed that encouraging trend. The latest travel woes have brought the tourist industry to its lowest level in years.

Executives of companies involved in tourism-related businesses have strongly criticized the government for not doing enough to support the ailing industry.

Instead of lending its support to the devastated travel industry, the government issued early last month a presidential decree to revoke the visa-free facility given to nationals of 48 countries since 1983. A government official said that a visitor could be charged between US$40 and $45 for a visa-on-arrival.

Critics have called the move to revoke the visa-free facility "ridiculous", especially at a time when tourism was in serious trouble.

"Charging (tourists) for the visa will further worsen the already battered tourist industry," said travel portal Indo.com CEO Eka Ginting.

Travel company Panorama president director Satriyanto Tirtawisata shared Eka's view, saying that the government's decision to revoke the visa-free facility had dealt another heavy blow to the nation's shattered tourist industry.

"The policy is not only unnecessary but also counterproductive. It complicates things right in the midst of the survival game for most tourist industry players," he said.

Like Satriyanto, Ika Nazaruddin, the public relations manager of Pacto travel company, also supported the appeal to cancel the government's policy to remove the visa-free facility.

ASITA which groups about 3,000 tour and travel agents, has suggested the government to issue a stimulus package to keep travel companies afloat instead of removing the visa-free facility.

ASITA's chairperson Meity said the stimulus package could include low-interest rate loans, which were needed to prevent companies reliant on the tourist trade from closing.

Besides proposing an extension of subsidized loans, ASITA also appealed to the government to abolish a value-added tax imposed on tour operators.

"Abolishing the value-added tax, income tax and departure tax could act as an incentive for encouraging people to start traveling, and would in turn salvage the ailing tourist industry," Panorama's Satrijanto said.

Meanwhile Pacto's Ika Nazaruddin said that compared to the Iraq war, SARS had had an even worse effect on our business because the majority of tourists come from Europe.

Pacto has seen a 70 percent drop in sales due to the Bali bombing, the Iraq war and fears of SARS. Before the Bali tragedy, Pacto used to annually handle travel arrangements for 50,000 foreign visitors, who traveled throughout the archipelago. "They were mostly from European countries, such as the Netherlands, Germany and France," she said.

Similarly, Indo.com, the country's largest travel portal, saw a 75 percent drop in international bookings. "We had begun to recover in January and were back up to almost half the normal numbers. But because of the war and SARS, the recovery process ground to a halt in March," said Eka Ginting of Indo.com.

Vaya Tour also saw a significant drop in its sales of inbound services, especially after the outbreak of SARS. It suffered a 70 percent drop in outbound tour sales.

The Indonesian Hotel and Restaurant Association (PHRI) said that since the outbreak of SARS, the country's hotel occupancy rate has dropped significantly, with Batam, Medan and Bali hardest hit.

Currently, the country's average hotel occupancy rate is around 30 percent.

The SARS has caused hotel occupancy rate in Batam, a favorite destination for Singaporeans, to drop significantly to 20 percent because many travelers from Singapore have canceled their visits.

The association also said that the average hotel occupancy rate in Bali was around 25 percent. "With 25 percent occupancy rate, a hotel is facing serious financial problem," said PHRI's Executive Director Carla Parengkuan.