Catalysing growth beyond Bali

Infrastructure development and investment have to go hand in hand in order for Indonesia’s ‘10 New Balis’ to take off. TTG Asia looks at the tourism progress in a few emerging destinations.

The soon-to-launch Ayana Lako di’a, a phinisi ship that will sail around the Komodo Island

The Indonesian government’s ‘10 New Balis’ directive is poised to open up myriad tourism opportunities across the country, but investors, hotels and tour operators are seeing varying levels of readiness on the ground that are as distinct as the destinations themselves.

Dadang Rizki Rahman, deputy minister for destination and industry development, Indonesia Ministry of Tourism, said: “Based on our experience in the last three years, there is a strong correlation between investment and the growth of arrivals. The more arrivals a destination gets, the bigger the investment poured into it.

The soon-to-launch Ayana Lako di’a, a phinisi ship that will sail around the Komodo Island

“That explains why Bali, Jakarta and Riau Islands (the top three destinations in the country) continue to attract investments and the number of hotel rooms keeps growing.”
Belitung, an island east of Sumatra, is a clear illustration of this. The destination rose to fame among Indonesian travellers after Belitung novelist Andre Hirata’s Laskar Pelangi (The Rainbow Troops) trilogy became a bestseller and movie hit.

The close proximity of Belitung to Jakarta (an hour’s flight away) facilitated its growth as a tourist destination, attracting hotel brands like Golden Tulip, Fairfield by Marriott and Santika Premiere.

Adjie Wahjono, operation manager of Aneka Kartika Tours & Travel Services said: “It was the domestic market that fostered the growth of the island’s tourism, attracting investors to open hotels to meet demand.”

The government’s strong promotion of the ‘10 New Balis’, which Belitung is part of, has helped to draw interest of both travellers and operators to the destination.
Indonesia’s Sriwijaya Air launched a charter service from Singapore between December 2017 and January 2018, while Garuda Indonesia is planning a daily charter service between Belitung and Bali in October using CRJ aircraft with 100 seat capacity.

Garuda Indonesia, director of cargo and international commercial, Sigit Muhartono, said: “We will start with a chartered service to create demand and support the government’s efforts to open up new tourist destinations.”

Sigit said it is part Garuda’s network development strategy to connect the “New Balis” with the world, and Singapore’s hub status will also be tapped to drive traffic into these emerging destinations.

And with Belitung queries from overseas partners now on the uptick, Adjie sees the need for more attractions and activities suitable for international travellers to be launched, in order for the island to continue down its tourism growth trajectory.

Similarly, Komodo is seeing pent-up demand for the destination since the tourism authority started promoting the island intensely since the late 2000s, but infrastructure and facilities still lag behind.

With Komodo Airport’s passenger traffic growing at 30 per cent annually, the authorities are expanding the runway of the airport from 2,250m to 3,200m to accommodate wide-body aircraft, coming on top of the new and bigger passenger terminal opened in 2015.
More hotels are opening in Labuan Bajo, the gateway to Komodo, and mid- and upmarket cruises are entering the market to offer day and live-aboard cruises around Komodo National Park.

Set to open on September 15 is the five-star, 205-key Ayana Komodo Resort, which will be followed in October with the launch of Ayana Lako di’a, a specially built phinisi ship for cruising around Komodo Islands.

Amid the visitor surge, Komodo needs better management to prevent visitor congestion and strains on the infrastructure, cautioned Ng Sebastian, managing director of Incito Vacations.

“Management needs to be stepped up. For example, the pier (at Rinca Island) can be overcrowded with boats at times. There needs to be a queue management system or schedule for boats.”

However, infrastructure development alone does not always immediately convince investors to put their money into a destination.

Lake Toba has been improving its infrastructure in recent years, with the Silangit International Airport now in operation connected by direct flights from Singapore and the Kuala Tanjung harbour built.

The Lake Toba Tourism Authority has reportedly received domestic and foreign investment interest, but is yet to announce any materialised hotel or projects.

It’s a similar story for the Mandalika Mega Project in Lombok, which took a long time to take off. For more than a decade the government has undertaken numerous ways to attract investment, but despite the growth of arrivals to the destination, the flow of investment in facilities did not pour in as expected.

Hospitality investors and operators TTG Asia interviewed over the years were often quick to paint Lombok as an up-and-coming destination with a bright future, but in reality they would adopt a wait-and-see stand when it comes to actual investment on the ground.
Seeing this, Indonesia Tourism Development Corporation (ITDC), which spearheaded Mandalika’s development in 2015, took the initiative to invest in hotels by working together with state-owned developers Wijaya Karya and Pembangunan Perumahan, as well as international operators Accor (for the Pullman brand) and Club Med. Both hotels are now under construction with a targeted opening in 2020.

Henri Giscard d’Estaing, CEO of Club Med, said in a statement regarding the Lombok property: “We foresee Club Med Lombok to receive a high volume of international attention and clients, and raise global awareness for Lombok as a premium holiday destination.”
Abdulbar Mansoer, president director of ITDC, said: “By investing in these hotels, we expect international travellers, hotel operators and investors to develop properties in Mandalika.”

ITDC’s hotel investment strategy, which comes on top of the government’s incentives for investors – like providing land title for up to 80 years and one-stop licencing office on site – appears to have built up the confidence of hospitality investors and operators.

Edwin Darmasetiawan, director of ITDC said: “Today, we have 2,500 hotel rooms in the pipeline within the next five years, attracting international investors (among others) from the US, South Korea and France.”

Other hotels coming up in the pipeline include Royal Tulip, Aloft, Mysk by Shaza and Shaza hotels.

Overseas tour operators have different views on how these developments would work for them.

Karine Hosan, owner and manager of Travel Truck France, opined that tourism stakeholders in Indonesia needed to promote these new destinations extensively to create international awareness, even at this stage when the developments were still under progress.

“Clients look for new destinations and we believe Indonesia has a lot to offer, but we need to be informed of these destinations,” she said.

Ram Samtani, general manager of Singapore-based Ramesh Travel Service, said: “There needs to be the right (supporting) infrastructure in the destinations. There is no need for an (international) airport if airlines do not see it feasible to fly to a destination, for example.” – additional reporting by Tiara Maharani

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