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Is the condition of the hospitality industry improving and is it ready to enter a new phase for the remainder of 2021?

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1. The current condition of the hospitality industry is considered to still depend on the domestic market. Considering the decline in positive Covid cases as a result of vaccine distribution, will the remainder of 2021 be better period for the hospitality market in Indonesia?

The Hospitality Market in Indonesia has only been in “sleep” mode during this pandemic. But the stakeholders in this industry have kept making preparations to face the New Normal. From the end of 2020, hospitality industry conditions improved because the government opened access to travel, even though it was only for the domestic market. However, the Hospitality Market was compelled to go back to "sleep" after Q1 2021, considering the large increase in positive cases in the Q2.

However, it’s true, according to several indicators, the remainder of 2021 will be a better period, with better growth for the Hospitality Industry. For instance, the regional occupancy rate in Bali has improved from single digits to reach approximately 20%. Besides that, the number of people getting full doses of the vaccine is getting higher. It gives our domestic market the courage to start travelling. However, the market will remain soft because there are still concerns around the possibility of increase in the number of positive cases.

2. Indonesia is a country that is famous for its tourism; from your point of view, which city or area is likely to see an increase in the numbers of visitors? Which category will experience the fastest growth?

In tourism, Bali will still be the leading destination and it will pick up first, followed by other destinations such as Central Java or Daerah Istimewa Yogyakarta and Labuan Bajo. The middle market will start to be dominated by our domestic tourists, because they get the best chance to enjoy destinations that were previously unreachable or perhaps unthinkable to visit.

The industry that will be directly impacted is Accommodation, which will directly enhance the Food & Beverage sector, since these two industries are basic needs. Four and five-star Accommodation and the "boutique" concept will be in demand in the new market. Apart from being affordable, it is also because the need for "safety & health" will be the concern of consumers in the future.

3. What trend do you predict will arise in the hospitality industry after the Covid situation improves in Indonesia?

We may experience "Revenge tourism" after the situation improves and the government decides to open Indonesia to foreign tourists. “Revenge tourism” means there will be high demand for travel, where demand has not yet been channelled due to governmental and security policies. The market will overflow with consumers when the tour door is opened. However, even though the PPKM has begun to be relaxed and dropped to a lower level, this can’t be interpreted as freedom; but rather, this is an opportunity for the hospitality industry to fulfil all indicators of readiness so that tourism conditions can arise again without neglecting strict health protocols and by following applicable local government regulations.

Domestic and foreign tourists' priorities have also shifted from "Pricing" as the primary consideration before the pandemic to "Health & Safety". Experiential Traveling has become a basic need for all travellers now and after the pandemic.

4. With tax deduction incentives for investors applied by the government to increase investment interest in the tourism industry, especially hotels, is this a sign that the hospitality sector is ready to enter a new phase?

Yes, the tourism industry has entered a new phase. Investors, both local, regional and international, have recently begun to show their "interest" in Indonesia. The Incentive Deduction Tax introduced by the government for investment in the tourism industry is indeed a good start. However, industry players and other stakeholders need to make basic preparations to ensure a good return on investment.

Therefore, the support of all stakeholders in this industry is mandatory, from central and local governments, business actors (owners and employees) and suppliers, to providers of labour needs. If everyone can support the basic preparations, then the incentives launched by the government will become more attractive.

5. Is now the right time for developers or investors to invest in the hospitality industry even though the current conditions are still unstable?

Now is the best time for investors to start organizing and preparing investments while the market gradually matures. An early investment decision that prioritizes the needs of potential customers is the best. Thus, the investment should not be a "follower investment", which will only get leftovers, but a "leader Investment" that creates new consumers; an investment made when other investors are holding back.

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Satria Wei

Director

Hospitality

Jakarta

Satria Wei is currently Director of Hospitality Services. His main objective is to assist hospitality owners and investors by making sure property operations run effectively towards meeting the investment targets of owners.

He works very closely with all business units in the company, especially Advisory, Investment and Research. 

Satria has assisted several properties and corporates to develop, operate and conduct asset management in hospitality industries in Indonesia and overseas. With 29 years of experience, Satria has participated in the golden and overcome the hardest periods of the industry. In addition, his 

interest in Revenue Management completes his skills package. He is suitable to deal with all stakeholders in the industry.

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