BMI's Indonesia tourism report looks at a variety of expected trends across a range of key indicators in this blossoming market located in the midst of the booming Asia Pacific region. Inbound arrivals are expected to increase steadily throughout the forecast period, and while growth in outbound travel is not expected to be as vibrant, the large domestic market in Indonesia still offers enormous potential.
The inbound arrivals market in Indonesia is dominated by its neighbours in the Asia Pacific region, with Singapore and Malaysia taking accounting for more than 3.9mn out of 8.6mn total arrivals in 2014. Australia currently is placed third in terms of arrivals, though by the end of our current forecast period we expect China to take this position with 1.3mn arrivals. Overall, we expect to see annual growth in arrivals of between 4% and 5% per year so by 2018 Indonesia will receive more than 10.3mn visitors per year.
As one of the most populous countries in the world, Indonesia presents an enormous potential domestic market. The outbound travel market is relatively underdeveloped, with an average tourist departure per 1,000 of the population of just 0.04. Still, growth of more than 7% per year means we expect to see outbound departures reach a very healthy 12.9mn in 2018. As with inbound travel, the outbound market is also dominated by countries in the Asia Pacific region.
Indonesia certainly has a lot to offer potential visitors, who are attracted by the country's vast range of picturesque beaches, and of course the extremely popular island of Bali; however, the country will need to invest heavily in transport and accommodation infrastructure if it is to keep up with demand. Signs are positive, with the government committing in April 2012 to invest US$43bn across rail and road transport.
The improvement of the country's transport network will enable the expansion of tourism to more rural areas, as well as providing a more positive investment environment for the leading global hotel groups. Many of the top global hotel chains are expanding in the country, with major groups Accor and Starwood Hotels and Resorts planning to open several new hotels. Domestic brands also continue to expand, reflecting the growth potential of the tourism market.
While the Indonesian tourism market presents a substantial opportunity for growth, it is worth noting that there is a lingering potential for terrorist attacks, and any decline in political stability is likely to affect the tourism industry.
Keys trends and developments include:
- Expansion in the number of hotels will result in strong growth in the amount of accommodation available, with the number of hotel rooms increasing from 151,450 in 2014 to 167,660 in 2018.
- Outbound travel is expected to increase by between 7% and 8% a year throughout the forecast period, with smaller but still strong growth expected in inbound arrivals. By 2018, we expect arrivals to reach 10.3mn and departures to reach 12.9mn.
- BMI has maintained Indonesia's overall Tourism Industry Risk/Reward Rating of 41.68 this quarter, placing it 19th out of 21 countries in the Asia Pacific region, reflecting concerns relating to infrastructure underdevelopment and potential security threats.
- Key events in 2014 include the Marine and Offshore Expo, the Indonesia Art Festival, the Bali Live International Jazz Festival, and a variety of religious and cultural festivals.