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Tourism will take at least a year to recover from COVID-19 outbreak: Economists

Jakarta Post - April 6, 2020

Riza Rodilla Mufti, Jakarta – Indonesia's tourism sector, the industry hardest-hit by COVID-19, is projected to take a long time to recover, although the pandemic is expected to slow down in the third quarter this year, economists and business players estimate.

Economist and director of the Center of Reform on Economics (CORE) Mohammad Faisal said the tourism sector really depended on the people's psychology, and was very sensitive to safety and security aspects. In the recovery period, regaining people's trust to travel again after the pandemic would be a challenging task, he said.

"During the recovery period, unlike other business sectors, tourism will take a longer time to return to normalcy because tourists need to ensure that the situation is really safe and secure before they travel again. So it will take time," Faisal told The Jakarta Post on April 2.

Faisal said that when Indonesia's tourist destinations were hit by natural disasters, such as Lombok's earthquake in 2018, tourists needed time before traveling there again. Even six months after the Lombok earthquake, tourist numbers had not yet returned to normal.

He predicted that COVID-19 would have a deeper impact than natural disasters, as people could not predict when the pandemic would be totally over.

"Thus, the tourism outlook this year will really depend on how this virus spreads. If the virus subsides in the third and fourth quarter this year, we predict that the tourism sector will recover in 2021, but it will not be fully recovered yet," said Faisal.

Indonesia Travel Agent Association (Astindo) general secretary and director of Elok Tour, Pauline Suharno, said even if the outbreak slowed down in June, the after effect on the industry would continue, as it needed time to recover.

"We will not be able to sell [tourism packages] right away. It really depends on the economic situation as well. With the economy disrupted, it also reduces people's desire to travel," she said.

COVID-19 has hit tourism and left tourist destinations across the county empty of visitors. Some popular tourist sites are temporarily closed, such as Borobudur Temple in Central Java and Komodo National Park in East Nusa Tenggara.

Statistics Indonesia data show that Indonesia had only 885,067 foreign tourist arrivals in February, a 28.85 percent decline from February last year. Meanwhile, from January to February, Indonesia recorded 2.16 million foreign tourist visits, an 11.8 percent drop from the 2.45 million tourists recorded during the same period last year.

"Visitor numbers in February have declined at all entrance points. Considering the current situation, tourist visits are predicted to drop further in March than in February," said Statistics Indonesia head Suhariyanto on Wednesday.

Suhariyanto said that almost all tourists from countries known as Indonesia's main tourist markets such as China, Malaysia, Singapore and Australia fell in February. Tourist visits from China alone fell by 93.5 percent to only 11,780 people in February from 199,960 tourists in the same period last year.

Astindo recorded a 90 percent drop in sales following booking cancellations in March with potential losses expected to reach Rp 4 trillion, the same amount they reported losing in February. With the current situation, many travel agents have been forced to lay off their non-permanent workers such as drivers and office boys.

"The contracts of most non-permanent workers will not be extended. Travel agents also experienced difficulty to pay operational costs and wages in February and March. If there is no help from the government, many businesspeople [travel agents] will not be able to pay employees' salaries in April," said Pauline.

The PHRI reported the country's hotel overall occupancy rate had fallen to 30 to 40 percent since early January. PHRI chairman Hariyadi Sukamdani reported last week that 698 hotels across Indonesia had closed due to COVID-19.

To help the tourism sector and all businesses recover quickly after the pandemic, the chairman of the Indonesia Tourism Intellectuals Association (ICPI), Azril Azahari, shared several actions that must be carried out such as disinfecting major tourist destinations.

"Perform the disinfection at all tourist destinations including hotels, in order to regain people's trust that tourist destinations and accommodation in Indonesia is all free of COVID-19, so they can feel safe," stated Azril in its statement.

He also called on the government to provide financial incentives in the form of loan repayment relaxation to business players in the tourism sector, especially small and medium enterprises, and give cash assistance to employees working in the tourism sector.

COVID-19 will severely affect tourism globally. The UN World Tourism Organzation estimated that international tourist arrivals could decline by between 20 and 30 percent globally in 2020, from 1.46 billion tourist arrivals in 2019 to only 1.02 to 1.17 billion tourists this year. This could lead to financial losses of US$300 billion to $450 billion in international tourism exports.

Source: https://www.thejakartapost.com/news/2020/04/06/tourism-will-take-at-least-a-year-to-recover-from-covid-19-outbreak-economists.html