The Third Leg in Stabilizing Indonesia’s Tourism Sector: the Necessity of Hospitality Training

Oky Ceelen, Director and Co Founder, Jugo Consultancy

President Joko “Jokowi” Widodo has set ambitious targets for the

tourism and hospitality sectors in Indonesia by 2019. While his

goals could be achieved within his stated timeframe, and capital has

been mobilized to develop one crucial area for success, there must

be a holistic approach to developing the sector and ensuring these

targets are reached. Thus far the discussions have centered on

financing infrastructure development projects to attract foreign

visitors – the so-called “provide them Wi-Fi roads, and airports”

approach. There is a much more nuanced aspect to developing this

sector, crucial to attaining the government’s goals, and one that is

lacking structure and funding. So far, Indonesia has, or is

developing, two of the three legs for creating a stable, sustainable

tourism and hospitality sector.

20 million foreign visitors per year are expected to reach Indonesia

by 2019. Last year Indonesia just crossed the 10 million visitors

mark and is projected to surpass it once again this year.

Furthermore, it is projected that the tourism and hospitality sector

is to account for 15.9% of GDP in the same timeframe; currently it

provides 9.3% of GDP. It is anticipated that by doubling the number

of foreign visitors, the foreign currency reserve will also double from

its current level of USD10 billion per year. Given all of the above

goals, it is safe to assume that the government is seeking to attract

“high-spending” foreign visitors who are willing to shell out their

hard-earned money in Indonesia – not the budget travelers,

backpackers or surfers. There is another interesting aspect to these

goals as President Jokowi has called for the creation of 10 new

“Bali-esque” tourist destinations from all across the archipelago and

each with a different level of experience in providing top-rate

tourism services. But, what are the key components to a successful

tourism development program to attract the high-spenders that

have flocked to destinations like Bali, and how can Indonesia ensure

that they will achieve it in such a short timeframe? And what can

the government do to ensure that these visitors will become “good

ambassadors” in spreading the word to others about travelling to

Indonesia, let alone become repeat visitors themselves?

Let’s start with the three fundamental pillars of a successful tourism

sector, which attracts the high-spending foreign visitor. It consists

of three components: attraction, infrastructure, and service.

Attraction is what brings someone to the country; it can be natural

vistas, culture, or man-made phenomena. Without the attraction

component there is no chance of attracting visitors, no one has

successfully marketed visiting the most boring place on Earth.

Fortunately Indonesia has been blessed with all three subsets of

attraction; from beautiful volcanoes and beaches to a rich, historical

culture with friendly people to amazing man-made structures like

Borobudur. Indeed, the World Bank has listed Indonesia as having

one of the highest potentials in the world for attracting foreign

visitors. However, attracting visitors, especially the high-spenders,

is not enough on its own to ensure a successful tourism and

hospitality sector.

The current focus of the government is to develop the second

component, infrastructure. It has been reported that the Ministry of

Tourism was given the green light to use part of the RP89 trillion

(USD 6.8 billion) budget from the Ministry for Development of

Disadvantaged Regions and Transmigration to provide RP1 billion

per annum for pilot programs to build infrastructure in villages for

tourism development. Additionally, private investment has

reportedly surged to USD 1 billion in 2015, a 45% increase from the

previous year. The government of Indonesia is also under

discussion with the World Bank to secure a USD 200 million loan for

this goal; although an unspecified amount has been mentioned to

be used for capacity building initiatives. Again, this is an important

aspect of achieving the government’s goals, but it is not enough to

ensure it will happen.

The third pillar absolutely required too, if the government is to

succeed in its goals, centers on the level of service provided to

high-spending tourists. Particularly considering that U.S. and

European visitors must travel between 16-35 hours just to reach

their tourist attraction, they expect a high level of service once they

arrive. Attracting these two groups of high-spending foreign visitors

is vital for the government’s objectives. Even if infrastructure is

found to be inadequate, a high-level of service can overcome these

issues and promote tourism once they return and share experiences

with co-workers, friends, and family – or even with a wider

audience on websites such as Travelocity or TripAdvisor. Hospitality

can overcome a deficit in infrastructure, but not the other way

around; most travelers are willing to tolerate minor infrastructure

deficiencies but expect excellent service in return. However, the

development of this third pillar has been left out of the discussion

on how Indonesia will go about delivering on pledges to develop its tourism and hospitality sector.

The government can provide a structure, complete with a funding

mechanism, to promote capacity building initiatives that will match

high-spending visitors’ expectations. It needs to go hand-in-hand

with infrastructure development initiatives, so that all three

components are ready to attract and serve visitors at the same time.

Furthermore, this needs to include the public and private sectors.

The government should require investors to support human capital

development in the hospitality sector, especially in areas where

there is not a significant historical linkage to hospitality service. This

not only benefits the hoteliers for drawing on a skilled group for

employment, but it also helps promote the supporting actors of

tourism: the local tour guides, restaurateurs, craftsman, and other

service providers.



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