Tourism is one of the new sectors that needs to contribute more to economic growth for Indonesia to establish itself as an influential regional player.

Indonesian tourism is set to explode over the remainder of the decade with annual foreign tourist arrivals hoped to double to 20 million in 2019, up from 9.4 million in 2014. 

This year, Indonesia expects 12 million foreign tourist arrivals, with estimated foreign exchange earnings of US$13 billion. The amount equals approximately $1,100 per tourist. This poses opportunities for both Indonesia and travel-friendly countries like Australia.

Australian residents love to travel. According to data from the Australian Bureau of Statistics, Australian citizens made 9.2 million short-term trips (defined as less than one year) to foreign countries in 2014 and 2015 with 5.4 million of those trips taken for vacations. 

To summarize, four out of 10 Australian residents traveled to foreign countries in those years and at least two of them traveled for holiday purposes. A conservative estimate of the foreign exchange impact on countries visited by Australians amounts to about $3.5 billion.

Not only do they love to travel, Aussies are also considered big spenders during their overseas vacations. Based on the Visa Global Travel Intentions Study 2015, Australia is ranked fifth in the top spenders with a median travel budget of $3,603. 

This number is well above the average foreign exchange impact per arrival we noted earlier (US$1,100).

In 2014 and 2015, Indonesia was the second main destination for the short-term visits by Australia residents (1.1 million), after New Zealand (1.23 million). 

We estimate those visits generated at least $500 million in foreign money entering Indonesia.

Understanding the current demographic trends in Australia provides guidance on where Indonesia should be looking for potential tourists. One example is retirees. 

The 2013 to 2014 Australian household income and wealth data (Australia Bureau of Statistics, 2015) reveals that older households, with heads of households older than 65, held more wealth ($1.38 million) than the average Australian household ($809,900). 

A significant proportion of their wealth is coming from home ownership, which means they don’t have to pay a large mortgage. This reduces their living costs so they can maintain their standards of living despite having a gross weekly income lower than other households.

The data on wealth distribution is aligned with what we see in the five-year comparison (2014 to 2015 and 2009 to 2010) of international short-term trips made by Australians. 

The increase in the number of those older than 65 traveling overseas is significantly higher (a 77 percent increase) compared to other age groups (mostly below a 40 percent increase).

How can Indonesia tourism build a stronger presence in the Australian market? The world is disrupted by extreme automation and connectivity. 

Most travelers nowadays can access information to plan, book and find travel information through mobile or web devices. A positive digital presence is a must for promoting tourism in Indonesia.

Indonesia’s presence in Australia needs to go “beyond Bali”. In the last two years, the majority of direct international tourist arrivals (at least 900,000) from Australia are through Bali. This poses a challenge for Indonesia which just introduced 10 priorities for tourist destination development (Borobudur, Mandalika, Labuan Bajo, Bromo-Tengger-Semeru, Kepulauan Seribu, Toba, Wakatobi, Tanjung Lesung, Morotai and Tanjung Kelayang).

Indonesians living abroad can also support building up the presence in Australia. We can introduce more tourist destinations effectively in our local community when we are given with the right level of information.

In the case of Western Australia, we can also leverage existing government-to-government relationships. The sister province relationship between East Java and Western Australia is one of the examples. 

Perth, the capital of Western Australia, is only four hours away from Jakarta and Bali. This state also has the highest likelihood of traveling overseas for holiday (about 40 percent). 

Traveling time to Indonesia (via Jakarta and Bali) from Western Australia is at least the same as traveling time to eastern states in Australia.

We should translate this relationship into tangible activities that promote tourist destinations in both states. Some ideas that we discussed with our colleagues involve bi-annual sporting events held in both states and a yacht rally from Western Australia to East Java.

A tailored approach is necessary. Setting a clear goal for tourism and introducing the 10 priority tourist destinations are the right moves for Indonesia. Now it is more about understanding the identified potential markets to align the development and promotional activities. 

Always develop the “why” and the “what” before the “how”. A tailored approach for each potential market is necessary and a cross-border strategic partnership could be one of the keys.

***

Hendro Fujiono and Matt Shepherd are respectively management consultant/chairman and management consultant of IA-ITB Western Australia.

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