A villa in Bali
THE buoyant domestic travel market will keep the hospitality sector in Indonesia afloat despite terrorism threats and uncertainties surrounding the global economy, according to Horwath HTL’s Top Trends in Indonesian Hospitality for 2016 report.
Homegrown chains such as Archipelago, Tauzia, Whiz, Zuri, Santika and Horison are expected to continue their aggressive expansion with bulging pipelines. However, with over 130 different brands across all market categories offered by some 50 domestic operators, the brand saturation also creates fierce and unsustainable competition among the chains amid growing corporate costs.
As well, millennials are emerging as a dominant new consumer group with social media increasingly impacting consumer purchasing decisions, observed Matt Gebbie, director of Horwath HTL. The mobile generation is less driven by brand loyalty and will usually search for unique perks and value-for-money experiences, he added.
Gebbie said: “There’s an explosion of homegrown hotel brands eager to win over this demographic. However in the race to market, brand identity and product differentiation are often neglected, (resulting) in price wars and a lower bottom line.”
As such, Horwath foresees the consolidation of local hotel brands to begin in Indonesia this year, reflecting the greater consolidation trend on the global hospitality front.
The sharing economy and online integration technology are also shaping travel in Indonesia with the rise of travel aggregators (e.g. Travelio, Traveloka, Tiket, Goindonesia and Travelindo) and peer-to-peer business models (e.g. Airbnb, Go-Jek and Uber) in the country.
