Promising Tourism in Indonesia Presents New Investment Opportunities

CEIC Indonesia Data Talk, January 23, 2014- Indonesia's tourism industry has considerable potential given its high cultural diversity among its provinces, leading to continuously increasing visitor arrivals. The number of visitors has seen continuous year-on-year growth since February 2013; as of November 2013, visitor arrivals grew by 16.37% year-on-year with 807.42 million visitor arrivals during November 2013. On a year-to-date basis, Indonesia played host to 7.94 million visitors compared to 7.26 million during the corresponding period of 2012. The increase in visitor numbers is likely to have continued in December as there tends to be a greater influx towards the Christmas and New Year holidays. ASEAN countries (which include the bulk of Southeast Asian nations) dominated visitor numbers during 2012, largely due to low intra-ASEAN flight fares and the ease of entry among ASEAN states. Some 35% of visitors originated from ASEAN countries (numbering 1,663,401), with 1,065,667 visitors arriving from Asian countries outside ASEAN. Continued growth in visitor arrivals may provide the government with the required momentum for enhancing the tourism sector, be it through the development of key facilities and infrastructures to the promotion of tourism hotspots. The Australian Bureau of Statistics reports that Indonesia is the second-most popular destinations for Australian residents with 910,000 short-term trips (mostly for holidays) to Indonesia, out of a total of 8.4 million short-term trips overseas during 2012 and 2013. Nevertheless, Australia only contributed tourism revenue of USD 1.45 billion, which was 4.6% lower than the USD 1.52 billion received in 2011. During 2012, Indonesia's total tourism revenue stood at USD 9.12 billion, 6.62% higher than in 2011. In terms of expenditure per visitor, a total of USD 1,133.810 was spent per visit or USD 147.22 per day in 2012, which equates to rises of 1.4% and 3.2% respectively compared to year earlier levels. The bulk of tourism revenue comprises accommodation and shopping (48.62% and 15.50% respectively during 2012). Rising tourism revenues from accommodation – which has seen double-digit growth since 2010 – has sparked interest from hospitality industries to expand their operations by constructing new hotels in order to meet the need for more rooms. In 2013, the number of hotels grew to 1,778, dominated by 554 three-star hotels. This figure is 9.6% higher than the number of hotels in 2012. Presently, rising tourist arrivals coincides with the growth of new hotel projects in Indonesia; the Accor Group, for one, is planning to build 100 new hotels by 2015 while another, Panorama Group, is targeting the construction of 20 new hotels by 2017 in several big cities across the country. Part of the attraction of Indonesia as a tourist destination has been attributed in part to the weakening exchange rate of the Rupiah which traded at IDR 11,977/USD as of November 2013; a weaker rupiah helps increase Indonesia's appeal as a tourist destination, notwithstanding other considerations. The tourism industry can benefit much from governmental initiatives to further boost visitor arrivals, hence encouraging national economic growth through investment in the hospitality industries. Higher investment in this sector will open a lot of employment opportunities amid new hotel construction projects, leading to increased public revenue. Moreover, the presence of new hotels will stimulate the proliferation of new businesses in tourist destinations as well as encourage the demand for local products. At the same time, Indonesia's burgeoning tourism industry may prove to be a welcome source of foreign exchange reserves to act as a brake on excessive depreciation of the Rupiah. By Yudha Prawira - CEIC Analyst Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription. Back to Blog
23rd January 2014 Promising Tourism in Indonesia Presents New Investment Opportunities

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