Indonesia's tourism sector is experiencing a robust recovery
Asean News Published 2 months ago on 4 September 2024 |
Author TIN Media
INDONEISA:
Indonesia’s tourism sector is experiencing a robust recovery, spearheaded by growing visits to Bali and Jakarta. This is according to analysis from Hotelivate, which however also warns that Indonesia should do more to protect its delicate ecosystems from over tourism.
The government of Indonesia has set an ambitious investment target of $3 billion in the tourism sector, supported by ten Special Economic Zones dedicated to tourism and the creative economy. Political stability, consistent GDP growth, and an expanding middle class are fostering confidence in the Indonesian market.
Although foreign tourist arrivals have yet to reach pre-2019 levels, the country has seen growth in both occupancy rates and average daily rates (ADR), underscoring the potential of domestic tourism.
Unlike other Southeast Asian markets, growth in Indonesia is not confined to major cities. Bali and Jakarta have been leading the pack with 14% and 11% year-on-year ADR growth, respectively, but other markets such as Java are not far behind. Notably, luxury hotel ADRs in Bali have surged from US$300 to $400 before the pandemic to nearly US$2,000 today.
Australians are the largest group of international tourists arriving in Indonesia. India and China are meanwhile becoming increasingly important source markets, contributing significantly to its tourism sector. The increase in disposable income among Chinese and Indian travellers is driving this trend.
Alongside international tourists, domestic visitors are another driving force. The size of Indonesia’s middle class is projected to triple, growing from 45 million in 2021 to 135 million by 2030. This demographic is expected to take 5.6 trips per year, 40% more frequent than other travellers, with a significant portion traveling for leisure.
According to Hotelivate, further investments in infrastructure, including better connectivity to regions beyond Jakarta and Bali, would lead to future growth opportunities.
Protecting Indonesia’s heritage and environment
The expansion of Indonesia’s tourism market also comes with its challenges. Hotelivate pointed at two factors:
Environmental degradation
The rise in tourism is putting immense pressure on Indonesia’s delicate ecosystems, making them highly vulnerable to damage. Globally, resource scarcity is becoming an increasing concern, particularly in Southeast Asia’s tourist hotspots.
“While many hospitality developments are adopting sustainable practices, there is a pressing need to expand these efforts as tourism continues to grow. Future properties must focus on regenerative development and adaptive resource management, with an emphasis on using recycled and biogenic materials,” said Hotelivate.
Preservation of local heritage
The rapid development of new hotels and tourist facilities is causing traditional tourist destinations in the region to lose their unique identity and cultural heritage. “Preserving this heritage, which is a major draw for tourists, is essential”, said Hotelivate in its report.
