The realm of domestic tourism within Indonesia is currently experiencing an unprecedented surge in growth, a phenomenon that has been catalyzed by the conclusion of the Covid-19 pandemic. This resurgence in the tourism sector is not only bolstering its own vitality but also ushering in advancements in related industries, with the hospitality sector particularly witnessing an uplifting transformation and presenting a business opportunity in Indonesia that can be reckoned with.
The revival of the tourism sector has undoubtedly reverberated profoundly throughout Indonesia’s hospitality landscape, as aptly articulated by Ross Woods, the CEO of Hotel Strategic Investments, who elaborated on this pivotal transformation. Woods emphasized that domestic tourists have indeed emerged as the stalwart pillars of Indonesia’s hospitality sphere.
He stated, “The year 2022 saw a staggering 96 percent of hotel guests being domestic tourists, underscoring the pivotal role of the local market,” a sentiment he shared with Kompas on Sunday (8/6/2023).
The trajectory of the tourism market paints a remarkable narrative of growth, transitioning from 256 million journeys in 2015 to a staggering 735 million trips in 2022. This substantial expansion has been propelled by a Compound Annual Growth Rate (CAGR) of 16 percent, with a remarkable 19.8 percent growth in 2022, surpassing the previous peak performance of 1.8 percent recorded in 2019.
This remarkable escalation of domestic tourism has been the driving force behind the renaissance of Indonesia’s hospitality sector.
Delving deeper into the landscape, even within the echelons of the five-star hotel category, an impressive 84 percent of patrons are now domestic tourists. This noteworthy trend is echoed across lower-star accommodations as well, with an impressive 93 percent of visitors frequenting four-star hotels and a staggering 96 percent opting for three-star establishments.
Business Opportunity: Revitalization of the Hospitality Industry across Various Regions
In the realm of Jakarta’s business hotels, the first half of 2023 bore witness to an upsurge in activities such as meetings and a spectrum of other events encapsulated by the acronym MICE (Meeting, Incentives, Convention, and Exhibition). This heightened engagement, including international music concerts, sporting spectacles, and exhibitions, has played an instrumental role in surging demand for hotel accommodations.
Moreover, elongated weekends have yielded an increase in family-centric staycations, contributing to year-to-date (YTD) occupancy rates that have soared to 60.2 percent, 56.0 percent, 61.7 percent, and 55.0 percent, respectively, for three-star, four-star, five-star, and luxury hotels by May 2023.
The upward trajectory reflects an annual increase in occupancy of 2.7 percent from 2022. A stand-alone testament to this trend, the average hotel occupancy rate in Jakarta stood at an impressive 65 percent in May 2023, surpassing the pre-pandemic occupancy rate of 43 percent observed in May 2019.
The amplification of this improved occupancy matrix has had a direct influence on the escalation of the average daily rate (ADR) across a plethora of market segments.
Turning our focus to Bali, the hospitality domain has been a bastion of remarkable progression. Notably, as Indonesia hosted the G20 Summit, Bali was designated as a pivotal city for hosting various facets of the event. This global event proved to be a catalyst for positive change within the realm of hospitality.
Drawing on insights from VOA, Agung, the proprietor of PMG Hotels and Resorts, which boasts three starred establishments strategically positioned in locales such as Legian, Kuta, and Seminyak, illuminated the symbiotic relationship between the G20 Summit and the hospitality sector.
“The G20’s impact on Bali’s tourism landscape has been substantial. This could be attributed to the fact that the Nusa Dua area was brimming with activity, leading to heightened security protocols for access. Consequently, guests might have opted to stay away from areas designated for the G20 event,” he postulated.
Komang Astawa, Managing Director of Astadala Hospitality, which oversees a constellation of resorts, exclusive villas, and spas across Bali, emphasized that the impact reverberates strongly in the realm of Bali’s international reputation.
“We are confident that this augurs well for Bali and Indonesia, particularly for tourism, and specifically within our sector. The increasing influx of countries and flights to Bali, combined with the added allure of the G20, instills a newfound confidence and assurance for tourists to experience the charms of Bali,” Astawa affirmed.
Business Opportunity: The Resurgence of the Upper Middle-Class Population
Undeniably, Indonesia has regained its stature as an upper middle-income nation. This classification is a testament to Indonesia’s resurgent economic growth, which surged by an impressive 5.3 percent in 2022. Consequently, the gross national income (GNI) per capita in Indonesia experienced a commendable 9.83 percent uptick last year, propelling the nation into the echelons of the upper middle-income category.
The expanding upper middle-class demographic has become an instrumental catalyst in propelling the growth trajectory of various sectors, including the hospitality industry. This growth trajectory holds the potential to attract a surge of foreign investment, thereby catalyzing economic growth and fostering opportunities for collaboration within this multifaceted sector.
As Paradise Indonesia’s property sales segment demonstrates, this advancement is palpable, with figures reaching an impressive Rp102.4 billion, reflecting an almost tenfold growth within the first semester of 2023.
With the resurgence of the tourism sector and the upliftment of the hospitality industry, the business opportunities in these two sectors appear highly promising, not excluding foreign investors. Moreover, the government has also issued several regulations that facilitate their investment in Indonesia.
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