More travel agents may close as business gets worse
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.