Tourism industry feels the pinch of global slump

Tantri Yuliandini The Jakarta Post Jakarta

These have been tough times for Indonesia's tourism industry, hit first by the 1998 Asian financial crisis and now by the most recent global economic downturn, made worse by the terrorist attacks on the United States.

Hopes had run high that this year would see a turning point, which was not inconceivable. Since the government's target of 5.1 million foreign visitors was successfully reached last year, was there any reason to doubt that this year's goal of 5.4 million visitors could be far behind?

After all, despite being swept by an earlier crisis, the Indonesian tourism industry has proven itself resilient.

After falling 11.16 percent to 4.6 million foreign visitors in 1998 -- compared with a peak of 5.2 million visitors the previous year -- arrivals of foreign visitors quickly bounced back last year to a record 5.1 million visitors.

But no sooner had the new year begun, when the industry was faced with new hurdles as political uncertainties in the country mounted, resulting in a drop of 10.79 percent in visitors in February.

All in all, however, it was not a bad first six months, with 2.08 million people arriving through Indonesia's 13 main points of entry, compared to the 1.95 million foreign arrivals recorded for the same period in 2000.

Those points are airports in Jakarta, Bali, North Sumatra, West Sumatra, East Java, Central Java, West Nusa Tenggara, North Sulawesi, and South Sulawesi along with sea ports in Batam, Jakarta, and Riau and the land-border crossing in Entikong, West Kalimantan.

Megawati Soekarnoputri's ascension to the presidency gave a breath of fresh air and, for a brief moment, confidence returned as foreign tourists began coming back into the country.

But this spirit of optimism was shattered when, on Sept. 11, two hijacked planes slammed into New York City's World Trade Center, reducing the twin towers to rubble.

The acts of terror, apparently masterminded by Osama bin Laden, brought on a deep sense of distrust against all Muslims, and a fear of long-haul flights.

As the country with the largest number of Muslims in the world, Indonesia was regarded with a suspicion that only worsened as radical groups began protesting U.S.-led retaliation against the Taliban in Afghanistan, where it believed the elusive bin Laden to be hiding.

Their threats of "sweeping" operations against Americans in the country prompted the U.S. and other countries to issue warnings to their citizens against visiting Indonesia which, in turn, has caused a significant drop in tourist arrivals from those countries, and elsewhere.

Compared to August, arrivals of foreign visitors dropped by 3.7 percent to 386,182 visitors in September and by a further 19.47 percent in October to 310,997 visitors.

This development caused the Ministry of Culture and Tourism to take stock and adjust the year's visitor arrival target.

Even the usually optimistic Minister of Culture and Tourism I Gede Ardika admitted that the attacks and the "sweeping" threats had rendered it impossible for the country to achieve its goal of 5.4 million visitors, and the US$5.3 million in hard currency revenue target.

The target was revised down to between 5.1 million and 5.2 million visitors for the year.

Furthermore, the ministry's head of the Culture and Tourism Development Body, Setyanto P. Santoso, said that the 2002 target of 5.8 million would also likely need to be adjusted by about seven to 10 percent.

Demand for travel has always been driven by the income of the travelers, the cost of the trip, and traveler confidence that the trip and the chosen destination were not unacceptably riskier than the alternative of staying at home.

But given the current circumstances, according to the International Labor Organization (ILO), the latter assumption could no longer be made.

"While fear of flying may quickly abate, general security worries are now uppermost in the mind -- individual's instincts are that the known home environment seems like the safest place to be, even if logic suggests this may not be so," the ILO said in its briefing paper.

Although not a strong market, visitors to Indonesia coming from the U.S. and Europe play a significant role in the industry's growth. European tourists make up about 15 percent of the total visitors to Indonesia, while those from the U.S. comprise of about 4 percent.

However, travel warnings from governments in the U.S. and Europe will likely dampen the desire to travel here for the next few months.

This image of a risky place to travel had not only hurt Indonesia's foreign visitor arrivals during the year, but also all other related industries such as the hotel and restaurant industries.

The World Travel and Tourism Council (WTTC) predicts some 8.8 million job losses around the world out of the total 207 million people employed worldwide in the travel and tourism industry.

In Indonesia, the industry was estimated to suffer a drop of about 20 percent to 30 percent.

Overall occupancy of hotels across the country dropped, including in Bali, which saw a decline in hotel occupancy rates to 50 percent from the usual over 60 percent, the Association of Indonesian Tour and Travel Agencies (Asita) said.

In Jakarta, five-star hotels bore the brunt of the Sept. 11 attacks, with occupancy falling to 35 percent for the third quarter of the year, compared to the same period last year, which saw a 38-percent occupancy rate, according to consultant Colliers Jardine Indonesia.

It expects the country's hotel industry to remain in the doldrums for the next 12 months, and will only start to recover in the later part of 2002 on the back of a rebound in the economy.

To prevent a further decline in tourist arrivals, the government should be ready to push for more promotional programs within the region.

The government said that, to offset damaging effects of media coverage, more aggressive tourism marketing and promotion would be targeted at markets within medium and short-haul flight range such as China, Korea, Japan, Taiwan, Australia and member countries of the Association of South East Asian Nations (ASEAN).

"We will also focus our marketing efforts to countries in Eastern Europe, Russia, South Africa, the Middle East and India," Ardika added.

During December, the government had also arranged tourism promotion advertisements aired 500 times on CNN and 250 times on BBC, respectively.

The 60-second and 30-second advertising segments showed the child-star Sherina singing the slogan, "My Indonesia, just a smile away."

The promotional video will also be shown on international flights, Ardika said. "Hopefully, our aggressive promotion will be able to recover the country's image as a beautiful, as well as a safe country to visit," he said.