Sunday, April 17, 2011

Indonesian tourism: Capitalizing on multiple strengths

Indonesia has set ambitious targets for tourism growth this year, as the country looks to realize its potential as a leading international destination for visitors and expand an important part of the economy.

The country is aiming to increase tourist arrivals by 10 percent to 7.7 million in 2011, following 8.5 percent growth to a record 7 million arrivals in 2010, up from 6.45 million in 2009.

Indonesian authorities are confident that factors including global economic growth and a number of major international conferences will drive up tourism earnings.

In 2010, earnings from international tourists reached $7.6 billion, with tourists spending $1.086 on average during their stay, up 9 percent from $996 in 2009, according to official figures. The average length of tourist stay also rose, from 7.69 days to 8.04 days in 2010, with this likely implying an increase in long-haul travelers.

This growth was achieved despite volcanic eruptions on Java and an earthquake in West Sumatra, natural disasters that might have had a negative impact on arrivals.

Research by the World Tourism and Travel Council (WTTC), a global organization of travel industry professionals, suggests that official figures greatly understate the importance of tourism to the Indonesian economy. The WTTC forecasts that the sector — including domestic tourism — will contribute $26 billion to GDP in 2011, 3.2 percent of the total. However, given tourism’s effect on demand in other sectors, the council estimates that the total contribution to GDP, direct and indirect, will come to $75.3 billion, or 9.1 percent of the total.

The WTTC expects tourism to grow strongly over the next 10 years, forecasting 5.8 percent average annual growth of both sector GDP and overall economic impact. Meanwhile, it expects investment in the sector to grow by 6 percent annually, from $9.5 billion in 2011.

Indonesia aims to capitalize on its traditional tourism strengths as well as develop new niches to build value in the sector. International press reports suggest that the island of Bali, for many years the jewel in Indonesia’s tourism crown and arguably its single destination of universal recognition, will see a 9 percent increase in international arrivals to 2.5 million from 2.3 million in 2010.

At the same time, the authorities are putting a strong emphasis on cultural tourism, drawing attention to Indonesia’s historical sites, traditional arts and local festivals. These attractions often appeal to well-heeled tourists from around the world, notably those in growing markets that have long had cultural ties to Indonesia, including China and India. On April 4, the Indonesian ambassador to India drew attention to the historical links between the two countries and urged the promotion of tourism between them.

Indonesia also has a growing reputation as a center for meetings, incentives, conventions and exhibitions (MICE) tourism, a segment that the Culture and Tourism Minister, Jero Wacik, expects to grow by 40 percent in 2011. The country benefits from its location near many of the world’s most dynamic emerging markets, relatively low costs and good conference facilities, as well as the strength and size of the domestic market.

Events being held in Indonesia this year include the Congress of the UN Educational, Scientific and Cultural Organization (UNESCO) in Bali in November. Coincidentally, UNESCO will discuss official recognition of several places in Indonesia as World Heritage Sites, including the 17th century Pura Taman Ayun temple in Bali.

There are some downside risks to the industry that are common worldwide. While the global economy currently looks fairly healthy, a slowdown in recovery could have an adverse impact on visitor numbers. Unexpected events can also have an effect; Balinese tourist officials are reporting a slump in the number of Japanese visitors since Japan’s devastating earthquake and tsunami in March. But past experience suggests that Indonesia can ride out temporary dips caused by economics and natural disasters, whether domestic or overseas. The strength of the country’s tourism is undoubted, and the sector is now moving to realize its potential.

By Josh Franken
The writer is the editorial manager of Oxford Business Group.
Source: The Jakarta Post

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