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

Indonesia's tourism sector, the industry hardest-hit by COVID-19, is projected to take quite a long time to recover, although the pandemic is expected to slow down in the 3rd quarter this season, economists and business players estimate.

Economist and director of the guts 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 visit again after the pandemic will 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 have to ensure that the situation is really safe and sound before they travel again. So it will need time,” Faisal told The Jakarta Post on April 2.

Faisal said that whenever Indonesia’s holiday destinations were hit by natural disasters, such as for example Lombok’s earthquake in 2018, tourists needed time before traveling there again. Even half a year following the Lombok earthquake, tourist numbers hadn't yet returned to normal.

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

“Thus, the tourism outlook this season will really rely upon how this virus spreads. If the virus subsides in the 3rd and fourth quarter this season, we predict that the tourism sector will recover in 2021, nonetheless it will never be fully recovered yet,” said Faisal.

Indonesia Travel Agent Association (Astindo) general secretary and director of Elok Tour, Pauline Suharno, said regardless if the outbreak slowed up in June, the after influence on the industry would continue, since it needed time to recuperate.

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

COVID-19 has hit tourism and left holiday destinations over the county empty of visitors. Some popular tourist sites are temporarily closed, such as for example 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 this past year. Meanwhile, from January to February, Indonesia recorded 2.16 million foreign tourist visits, an 11.8 percent drop from the two 2.45 million tourists recorded through the same period this past year.

“Visitor numbers in February have declined at all access points. Taking into consideration 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 virtually all tourists from countries referred to 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 persons in February from 199,960 tourists in the same period this past 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 existing situation, many travel companies have already been forced to lay off their non-permanent personnel such as for example drivers and office boys.

“The contracts of all non-permanent workers will never be extended. Travel companies also experienced difficulty to pay operational costs and wages in February and March. If there is no help from the federal government, many businesspeople [travel agents] will never be in a position 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 the other day that 698 hotels across Indonesia had closed because of COVID-19.

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

“Perform the disinfection at all holiday destinations including hotels, so that you can regain people's trust that holiday destinations and accommodation in Indonesia is all free of COVID-19, so they can feel safe,” mentioned Azril in its statement.

He also called on the government to provide financial incentives in the sort of loan repayment relaxation to business players in the tourism sector, especially small and medium enterprises, and present cash assist with employees employed 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 thirty percent globally in 2020, from 1.46 billion tourist arrivals in 2019 to only 1 1.02 to at least one 1.17 billion tourists this season. This could cause financial losses of US$300 billion to $450 billion in international tourism exports.