Weakened rupiah dampens Indonesian players’ yield

Bookings for the coming Christmas and New Year travel season may be strong for Indonesian outbound travel specialists, but the devaluation of the rupiah against the US dollar may topple hopes of a good yield.

The rupiah stood at 15,992 to one US dollar on October 26, compared against 15,856 rupiah per US dollar a week ago.

Jeffry: we have reserves but it is not enough to cover the currency difference

Pauline Suharno, president of the Association of the Indonesian Travel Agents (ASTINDO) and managing director of Elok Tour, told TTG Asia that tour packages presented and sold at the recent ASTINDO travel fair in August were priced in rupiah.

“Depending on how tour companies manage their finances, this currency drop could have a significant impact,” said Pauline, explaining that some agencies might have chosen to collect payment from customers first and pay their overseas ground handlers only at deadline.

Larger companies that are used to dealing with big groups may be able to escape unscathed from the currency woe, according to Pauline, as bookings are usually made far in advance and contracts tend to contain a clause relating to rate adjustments. Companies specialising in both inbound and outbound may also be able to dampen impact since they could “balance revenue”.

Jeffry Darjanto, director of Aviatour, said the currency devaluation was worrying since outbound travel performance has yet to return to pre-Covid levels even though travel interest is high.

For travellers who had paid only a deposit for their tours during the recent travel fairs, Aviatour could adjust final tour fees in response to currency changes and higher airline fuel surcharges. However, fare changes are not possible with customers who have paid in full for trips ahead.

“We have reserves (in anticipation of rate fluctuation) but it is not enough to cover the currency difference,” Jeffry said, adding that his team needs to be “strategic” about fees management so as not to “lose too much (money) and clients do not cancel their trips”.

“If the (adjusted) price is too high, clients may cancel their booking. If this happens, not only will we lose the business but clients will also lose the trip they have been waiting for,” he said.

As the rupiah has also devalued against the Japanese yen, worries are creasing the brows of Rudy Techrisna, managing director of Multi Holiday Travel in Indonesia.

“When I created my tour product (to Japan) about four months ago, the exchange rate was 102 rupiah to one yen – now it is almost 107. We will bear the losses because it is not appropriate to increase the price for clients who have confirmed their bookings,” said Rudy.

He added that his company would usually hedge prices with the bank, but this process required invoices from clients. Unfortunately, invoices for those affected bookings were only issued recently even though confirmation was made a few months ago.

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