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High Airfares Hurt Tourism

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MEDAN, KOMPAS— Tourism, which has become an important part of Indonesia’s economy, suffered a major setback lately due to increasing airplane ticket prices. To overcome this problem, a number of companies in the tourism sector have implemented an all-out promotion strategy.Many star-rated hotels in North Sumatra, Riau and West Nusa Tenggara have cut their rates significantly to remain afloat. However, their occupancy rates continue to fall. The performance of other tourism-related businesses in these provinces has also declined.

The gloom of the tourist industry can be seen in North Sumatra, where hotel occupancy has declined to 30 percent from 75 percent before the sharp increase in airfares late last year.

The hardest-hit business in the tourist sector is that of meetings, incentives, conventions and exhibitions (MICE). Many institutions have cancelled meetings or exhibitions in Medan.

"The main tourism activities in North Sumatra are those related to MICE. The high prices of airplane tickets have prompted many institutions to move meetings and exhibitions to Jakarta and its surroundings," the chairman of the North Sumatra chapter of the Indonesian Hotels and Restaurants Association (PHRI), Denny S Wardhana, said in Medan on Monday.

According to Denny, many organizations canceled meetings in Medan planned for this year because of the high airfares. A one-way ticket from Jakarta to Medan has more than doubled to Rp 2 million from Rp 800,000 previously.

Revenue from the industry, which normally surges during Idul Fitri holidays, has declined.

The occupancy rate of hotels in the Lake Toba area, which usually stands at 100 percent, is now only 80 percent. The chairman of the North Sumatra chapter of the Association of Indonesian Tour and Travel Companies (Asita), Solahuddin Nasution, said the revenue of North Sumatra travel agencies had fallen by an average of 50 percent.

Lower hotel rates

Tourism businesses in Riau face similar challenges. A number of star-rated hotels in Pekanbaru, the capital city of Riau, are offering special rates as low as those of non-star hotels. "Three-star hotels are even cheaper. The three- and four-star hotels are the hardest hit by the increase in airplane ticket prices," Riau’s PHRI chairman Nofrizal said.

About a year before the increase in ticket prices, according to Nofrizal, many national events were held in Pekanbaru. However, since the beginning of 2019, the number of exhibitions, meetings and exhibitions in Pekanbaru has shrunk sharply.

Separately, the chairman of the Riau chapter of Asita, Dede Firmansyah, said, since the beginning of this year saw three of the association’s members shut down amid tight competition.

Dozens of other travel agencies have temporarily stopped their business as they wait for conditions to improve.

The situation is not much better in West Nusa Tenggara (NTB). The chairman of the local chapter of the PHRI, Gusti Lanang Patra, said in Mataram that the increase in ticket prices had led to a decline in the occupancy rate of local hotels to between 20 and 30 percent. According to Lanang, the price of a flight on the Lombok-Jakarta route has risen to more than Rp 1.5 million at present from Rp 700,000 to Rp 800,000 last year. Meanwhile, the fare for the international route between Lombok and Kuala Lumpur is only Rp 700,000.

The government’s move to lower the price ceiling for airfares by 12-16 percent on May 15 has shown no effect. Local hotels will only feel a positive impact if airfares can be reduced by as much as 50 percent.

The chairman of the local chapter of Asita, Dewantoro Umbu Joka, said the high airfares had discouraged tourists to travel to areas like NTB. The situation has affected all related fields, ranging from accommodation and travel agents to small enterprises, such as eateries and souvenir stores. (NSA/SAH/ZAK/RUL)

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