JAKARTA, 15 February 2019: Indonesia’s tourism minister believes a recent 20 to 30% drop in hotel occupancy could be blamed on fare hikes and the decision to charge for checked baggage.
Tourism Minister, Arief Yahya, told Tempo news the new baggage policy and higher fares had caused a 30% drop in occupancy at Lombok hotels.
He warned a similar picture was emerging at other popular destinations served by low-cost airlines.
“Riau, Batam, and almost all regions in Indonesia have been affected,” he told Tempo. “Domestic tourism was hit the hardest, while foreign tourists was not directly affected.”
Hotels have seen occupancy fall from 60% before the change in fares and baggage rules to around 30% now.
The domestic travel market is a key driver for Indonesia’s hotel industry representing more than 70% of the bookings made with perhaps the exception of Bali that has strong appeal with international travellers.
The minister made the comments on the sidelines of a national meeting of the Indonesian Hotel and Restaurant Association (PHRI), earlier this week.
Fare hikes hit tourism, but also small to medium businesses that rely on low-cost travel to get around the country
“If you want to raise fares, don’t do it one big step and abruptly because the impact will be big for the consumers,” he said.
Given time the occupancies at popular destinations will rise again probably to around 55%, but the outlook was not positive for the country’s accommodation sector.
