History in the Making, Foreign Tourist Arrivals in Bali Hit Decade Low

Foreign tourist visits in Bali dropped 87.44 percent year-on-year (yoy) in April to a record low level as the COVID-19 pandemic hits air travel hard, recent official data show.

Central Statistics Agency (BPS) head Suhariyanto said foreign tourist visits reached 160,000 in April, a level unseen in history, as countries around the world impose different degrees of lockdowns or physical distancing measures to curb the spread of the coronavirus. “This shows that the impact of COVID-19 on tourism is tremendous and that we need to be careful about its impacts on supporting sectors, either on room occupancy rates, the transportation sector, the creative economy industry, trade and other things,” Suhariyanto told a livestreamed press briefing on Tuesday.

“We need to think of new solutions so that this sector [tourism] can recover in the future.” In April, only 755 people were recorded to have entered the country via air travel, making up the smallest portion of foreign tourist entries.

The majority of visitors came via land transportation with over 112,700, and over 46,500 visitors arrived by sea. Suhariyanto said during the month that airports had seen the biggest decline in traffic in comparison to seaports and land ports. BPS data show that, aggregately, airports in the country had seen a 99.69 decline in visits during the period. Meanwhile, seaports saw a 56.67 percent decline, and land traffic dropped 5.88 percent.

Cumulatively between January and April, the number of foreign tourist visits was down 45.01 percent yoy to 2.77 million visits.  Suhariyanto explained that the cumulative downturn was not as steep because the country still managed to attract foreign tourist arrivals in January for the New Year and Chinese New Year celebrations. BPS data show that the country still saw yoy growth of 5.86 percent to 1.27 million visits in January alone.  Most of the foreign tourists visiting throughout the year came via air travel, which amounted to 1.6 million visits, meanwhile, the number of tourists entering via sea and land was recorded at over 640,000 and 517,000, respectively. “There was a drop in visits from tourists of almost all nationalities.

But, for those from Timor Leste, the downturn was minimal as they can still travel overland,” Suhariyanto said.  More than 50 percent of foreign tourists visiting the country in April came from Timor Leste, or over 83,500 visits. Tourists from Malaysia made up 38.96 percent, or over 62,300 visits, while 2,100 Singaporeans visited, making up 1.34 percent of all tourists during the month.

Let’s examine in more detail last years figures for foreign visitor arrivals (available until August 2019 at the time of writing) and compare them to the prior years data on a month-by-month basis.

 

In 2019 from February until June Bali received less tourists compared to the prior year. That was mainly due to the drop in number of Chinese arrivals (discussed later). But other major groups also showed some signs of decline during these months (e.g. Australia, India, United Kingdom and France).

Meanwhile, January, June and August months 2019 were positive in relation to the number of tourists compared to the prior year. It should be noted here that in January 2018 the data still impacted by the extraordinary event (Agung volcano eruption at the end of 2017) and without this factor the number of visitors in January 2019 would have been lower than in January 2018 (for example, in January 2017 460’000 foreign tourists visited Bali, in January 2019 only 455’000 i.e. nearly as much).

On year-to-date (YTD) basis Bali for eight months of 2019 welcomed 4.08 million of foreign tourists which is less by only 0.3% compared to the same period of the last year. But, as always, the devil is in details. If we look at the year-to-date data compared to the prior year, we understand it resulted from the number of countervailing factors.

n total for eight months of 2019 the drop in China tourists’ arrivals created a dent of 122’000 visitors. This number is comparable by size to such markets as France, Germany or Malaysia for the same period. The hole of this size would be difficult to cover from other sources. See the section below “Where the rescue can come from?” for our by-country analysis.

Indonesian government has(d) ambitious plans to attract 20 million of foreign tourists to Indonesia by 2020 with Bali as its main tourist asset receiving 8 million of foreign visitors. So far, the Indonesian government officials were quite positive discussing that in media as 15.8 million of foreign visitors in 2018 to Indonesia supported the statement that the target would be within a reach. But sluggish performance of the country’s and Bali tourism markets in the first half of 2019 has called into question whether the target is archivable or not.

As discussed earlier, the decline in numbers on YTD basis in Bali was not mind-boggling but compared to the average historical growth rate of 11% for the last decade does not look impressive. Moreover, even if it was all good with the number of incoming Chinese, the sluggish growth rates from other countries’ visitor arrivals could not have supported the fact that the target of 8 million direct foreign tourists would be reachable by the end of 2020.

That can be explained by the fact that all the forecasts and targets are heavily biased by historical trends and seasonal patterns which is absolutely normal in forecasting but does not take into account the occurrence of “black swan” events. The trade conflict between USA and China is a clear example of such event which may have far-reaching consequences and carries a lot of risks for the world economy. Assuming an increased level of seasonal volatility, visible on the past data, we can expect that by the end of the current year the number of foreign arrivals will not exceed its prior year record. Therefore, the best-case scenario for 2021 would be a moderate decline in the number of foreign arrivals compared to the prior year.

Tourists from those three countries also reigned in foreign tourist visits between January and April, yet with a significantly lower proportion in the chart. Malaysian tourists made up 19.74 percent of the total visits, Timor Leste tourists 13.04 percent and Singaporeans 9.58 percent.  A report by the Organization for Economic Cooperation and Development (OECD) on the economic impact of the coronavirus that was published on March 2 writes that the cost of the tourism downturn will be severe. “If the spread of the coronavirus affects visitor numbers more widely across the major economies, there would be sizeable costs, with tourism accounting directly for 4.25 percent of GDP in the OECD economies and almost 7 percent of employment,” the report reads.

In Indonesia, tourism accounts for around 5 percent of GDP, with the government planning to boost the sector’s contribution to the economy with the development of super-priority tourist destinations. Many businesses related to tourism in the country have closed, laying off 1.4 million employees while others have furloughed staff in the two months since physical distancing and stay-at-home measures were put in place.

Association of Indonesian Tour and Travel Agencies (ASITA) chairman Nunung Rusmiati also said the assocation’s 7,000 members had been trying not to lay off workers, but were forced to carry out extra cost-efficiency measures, such as cutting salaries by 50 percent, in order to survive. Despite hoteliers’ attempts to adapt to new business strategies, such as renting hotels for medical workers, Hariyadi said the falling demand had made it almost impossible for hotels to remain profitable. “It’s hard to survive when demand is dwindling. All mitigation strategies that we’ve tried only provide us with a fractional result,” he said. He added that the association was now asking for penalty fee waivers from state electricity company PLN and gas company PGN for hotels and restaurants, and expansions of the government social safety net for furloughed workers to cushion the detrimental impacts of COVID-19. We all might be have the same hope that the condition will get better soon. But here in Bali we really extremely hope that the pandemic will end soon and we can get bound back with the tourism sector, because that is the main economic sources that we have here in Bali.

 

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