Japan, China and India will be represented at this year's Borobudur International Festival, which will take place in Magelang, Central Java, on July 28-30. (Reuters Photo/Andreas Fitri Atmoko)

Travel Companies Report Increase in Sales, Positive Outlook in H2 2016


AUGUST 08, 2016

Jakarta. Tour and tourism companies have reported an increase in sales and a surge in hotel occupancy rates in the first four months of the year, compared to the same period a year earlier, boosting a positive view for the industry in the second half of the year.

Panorama Sentrawisata, a listed tour and travel company, noted a 19 percent increase in gross sales to Rp 2.38 trillion ($181 million) as of the end of June compared to the same period a year earlier.

"We are going to keep focusing on our business strategy as it is in line with the national tourism growth," Panorama Sentrawisata chief executive Budi Tirtawisata in a statement on Tuesday (03/08), adding that the company is optimistic gross revenue would be up in the second semester.

Meanwhile, Hotel Sahid Jaya International, one of the country's first hotel chains, booked a 7.03 percent increase in revenue to Rp 73.65 billion in the first half of the year, compared to the last year.

Hotel Mandarine Regency revenue grew 13.2 percent to Rp 28.46 billion in the first half of the year, up from 2015.

Seasonal factor or consumers spending climbed?

Surge revenues are inline with increases in hotel occupancy rates and higher arrivals of foreign tourists. The Central Statistics Agency (BPS) found foreign tourist arrivals increased 5.8 percent increase to 5.29 million in the first semester this year, compared to the same period last year.

Hotel occupancy rates in 27 of the country's 34 provinces reached 53.2 percent in the first half of the year, up from 50.49 percent in the same period a year earlier, while foreign tourist arrivals increased to 5.2 million in the first half, compared to last year's 34.98 million in the same period.

However, the increase may just be seasonal with many companies luring guests with great deals. For tour and travel companies in Indonesia, these tend to revolve around religious holidays.

"The country's consumer spending has yet to recover as the increase of sales from tour and travel company and hotel occupancy rate were mostly driven from those 20 percent of Indonesia's upper and middle class societies," Enny Sri Hartati, economist at the Institute for Development of Economics and Finance (Indef), said on Wednesday.

"Only those 20 percent of people can have access to leisure activities," Enny said, adding that consumers from lower classes society will start spending again when staple food prices maintain a stable level.

Overall, consumer spending remains in a weakened with a drop in savings accounting for low spending.

A consumer confidence survey conducted by Indonesia's central bank, Bank Indonesia, polled 4,600 respondents in the country's 18 largest cities. It found the average consumer's spending to income ratio was up to 69.38 percent in the first half of the year, a 4.5 percent increase from last year.

Meanwhile, consumer savings to income ratio dropped 0.5 percent to 18.7 percent in the first six months of the year, compared to the corresponding period in 2015.

Enny said the government must step up efforts targeting domestic tourism, with many holidaymakers preferring to go abroad citing costs.

"The tourism Ministry is only focused on increasing the number of foreign tourists arrivals despite their low spending in the country," she said.

Domestic tourists, she said, could stimulate small and medium enterprises around tourist attractions.

"This move would definitely increase our foreign exchange reserves," she said.

Different strategy to attracting more tourists

Ben Sukma, head of the Association of Indonesia Tours and Travels (Asita), said the overall outlook of Indonesian tourism is still bright for the second half of the year, although it may be lower than the government's targets.

The government has missed its targets in attracting 10 million foreign tourists in 2015 with BPS data showing only 9.73 million foreign tourists arrived.

This year, the government has set a higher target of 12 million tourists but a different strategy is needed to achieve this, he said.

"If I was interested in going on holiday to certain parts of Indonesia, I need to know in details about the price, transportation and accommodation," Ben said.

Rather than focus on providing this basic information, the government tends  to focus on holding events at five-star hotels, hoping to attract visitors.

"They need to hire consultants who know how to create a strategy," he said.

The Ministry has set several targets for 2019, hoping to achieve Rp 240 trillion in foreign exchange reserves, increasing foreign tourist arrivals to 20 million and domestic tourism trips to 275 million annually.