Rupiah woes hit travel agencies

Rupiah woes hit travel agencies

From Neraca

We, along with some university mates, have been running a small-scale travel agency since 1994. Early this year business improved when we got a contract from a certain university for a study tour, involving hundreds of participants.

Scheduled for August 1997, the tour had two destinations: Batam and Singapore. We booked tickets and hotel rooms and the reservation was made in U.S. dollars, as is the practice in the travel business.

The cash flow from this planned tour was calculated on the basis of an exchange rate of Rp 2,450 per US$1. From our calculations we expected to make a considerable profit.

Last July, a payment in rupiah was made for half of the tour fees and in August the final payment was made, also in rupiah.

However, we were shocked to find that in late August the exchange rate of the rupiah against the dollar had plummeted. What was worse was that the exchange rate of the Singapore dollar against the U.S. dollar had also dropped. This was really a disaster for our business.

Now the exchange rate of the rupiah against the U.S. dollar for an air ticket is temporarily set at Rp 3,000 per dollar. This means that our actual loss is Rp 550 per dollar, when in fact one ticket costs hundreds of dollars.

The situation will be much worse if changes in the hotel tariff are taken into consideration. If businesspeople like us, who run a small project, have to sustain losses worth hundreds of millions of rupiah because of depreciation, imagine the problems facing those involved in large projects.

The impact of rupiah depreciation has hit many small-scale travel agencies. The total number throughout Indonesia may be in the hundreds, especially in Bali. They must all be "in mourning" now.

So the statement of Minister of Tourism, Post and Telecommunications Joop Ave, that rupiah depreciation is a blessing to tourism, is entirely incorrect.

If he means that foreign tourists can benefit from the rupiah depreciation because their purchasing power has become stronger, this is something I can agree with. However, the rupiah crisis has "knocked out" travel agencies which support tourism.

We hope the government will do something to help travel agencies and hotels. It may, for example, decide to lower air fares and hotel tariffs by the amount of the rupiah depreciation (about Rp 550/US$1), In other words, air fares and hotel tariffs in rupiah remain at the same rate.

We think we deserve the government's attention because we nevertheless help make economic development a success through tourism.

ARIF and VICKY

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