Industries |

The Wild Card for the Hospitality Industry in Indonesia

Industries | 24 April 2020
Tourism business, including hotels and restaurants, are among the struggling industries affected by the Covid-19 Crisis and it’s expected to recover last after the pandemic ends. Photo by chuttersnap on Unsplash/NOWJAKARTA

As global air travel plunged due to the rapid outbreak of Covid-19, with a restriction in the international gate as well as a significant decrease of the passenger in domestic travel, the tourism industry including airlines, hotels and culinary businesses were the first to be affected by the Covid-19 outbreak. With a number of official orders from the government to limit human mobility in the country as an effort to curb the spread, this industry is predicted to weaken in the following months and likely to recover the last after the economy is back to normal. 

Indonesian Hotel and Restaurant Association (PHRI) recorded that a total of 16,642 hotels have closed following the government’s order to reduce potential crowd and travelling activities in the archipelago. In mid-April, 363 restaurants closed their dine-in service and terminated its offline business indefinitely, according to the association.  

Hariyadi Sukamdani, the chairman of PHRI said the industry was hit the hardest due to the effects of Covid-19 pandemic. Sukamdani noted that hotels could reach below 5 to 20% from total occupancy as most hotels have decided to close the service during the period to reduce operation costs. He also noted that small-scale and independent restaurants are struggling to continue the operation and it forced the business to lay off their staffers. 

“We can’t do much because there is no demand. We have to stay realistic as we keep hoping for the best. Tourism was the first to be affected and will likely be the last to recover as the industry is categorised as leisure. Since communities have been focusing on fulfilling the essential needs and some of them lost their jobs, tourism will be back in place when the economy is back to normal,” Sukamdani said to NOW! Jakarta.

Currently, restaurants that have the capital and capability are shifting the business using digital platforms with food-to-go and delivery service. Sultan Hotel and Residence that own residential or long-stay properties still could cover the gap of the business with subsidiary and cross-business strategy. Hotels close to industrial and essential business today still remain active for the operation and could maintain at least 30 to 40% from total occupancy. 

Some hotels also optimise its dining outlet and start offering delivery service to consumers. Sukamdani could not determine the period of recovery that will be needed for tourism to run and energise the business again. Some analyses mentioned that the tourism industry will need at least six months to get back on its feet after the pandemic ends. 

“I think that people will be trying to recover their finances first before spending money on travelling again in the near future. For luxury tourism, one might not directly restart travelling. On the other hand, mass tourism needs longer to recover as the majority of the segmentation are low and middle-class communities who are currently struggling with their personal finance,” Sukamdani stated.

As practitioners in hospitality, Sukamdani said that Covid-19 has affected human lives in a different way with no expectation of the tourism industry. This specific virus creates a major disruption where the cost of the pandemic can be solved with only traditional economic assumption. “There is a lot of uncertainty. We don’t have the experience of how people handled a similar pandemic, for example, when Spanish flu happened in 1918. So, the way we handle the crisis is not applicable if there is a disaster like Tsunami Anyer or Bali Bombing,” Sukamdani said.   

For now, the association is waiting for the implementation for economic stimulus from the government to secure the industry. Government regulation expected to ease the crisis through tax relief includes remission for operational cost and tax payment period. “We have to secure the people within our networks including staffers, management and people who are used to being in service. The stimulus is needed to protect these people as there are 1,5 million of people who work in the tourism industry in Indonesia,” Sukamdani explained.  

The realisation of tax freeze and economic stimulus are proposed to be applied for 12 months to ensure the gradual process to let industry to recover. “All of the sector, whether it’s restaurants or hotels, have a same risk. But restaurants will be recovered first as the products of the culinary destinations are popular consumer goods. People need to eat and probably going to their favourite restaurants. Hotels will take longer to recover,” Sukamdani added. 

Besides that, many hotels and restaurants in Indonesia also suggest running promotions to attract the community of travellers and tourists to go back to discovering Indonesia. As many people are locked at their home, hoteliers also remain optimistic that people will start planning to go somewhere as people have a dream to travel again after the pandemic is over.

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