Marriott and Indonesia's Tourism Minister on the SEA Travel Boom
The travel and tourism industry here in Asia Pacific is a huge driver of economic activity. This year alone, the industry is expected to create about 190 million jobs across the region, with tourism contributing to nearly 9% of the region's GDP. Of course, there are headwinds and challenges and we're so grateful to have two fantastic distinguished guests here with us to help us unpack that.
Raji, let me start with you. Where are we with the travel rebound post-pandemic? So it was very clear that as humanity at large was locked up during COVID, we all figured out nothing was more important to us than our freedom ability to travel and spend time with family and friends. So what we saw around the world was every single country as they open their borders. People flocked out in Asia Pacific, China, which is the region I represent. We saw full recovery in the last quarter of 2022.
And since then, we've been growing double digit quarter on quarter. Just this year, year to date, July, our rev par growth, which is revenue per available room for again, Asia Pacific, China is at 14% and Indonesia is actually leading with 16% growth. That's really huge. What was it before the pandemic post 2019 or before 2019? Well, again, the numbers were in that 5 to 6% range.
But keep in mind that a lot of it is strong recovery coming quarter after quarter. So it is clear in what we are seeing around the world that people have prioritized travel and experiences and are willing to pay more and really put aside other spending so that they can travel. That's really great. Everybody wants to get out there that that revenge travel is still very much at work right now. Minister Uno, Indonesia opened reopened its borders in January of 2022. What would you say has really worked for Indonesia in terms of welcoming back foreign travelers and where are still the challenges ahead? First of all, thank you for having me in this panel and thank you for Bloomberg to help my KPI's by organizing this conference. You are the quality travelers that we are targeting. Not only that, you come here and
stay longer, but you spend more into the local economies. So this type of events, we call it my event is has been consistent in putting our recovery stronger than expected. Thank you. So we see Mei's event because we kick off the opening of the border with April 2022 because we must prepare for the G20. And then the G20 itself was a very great success.
It was followed by our chairmanship of ASEAN last year and this year we hosted a series of my event, including one of the biggest is the World Water Forum in Bali. I just got back from Bali for the Indonesia Africa Forum and which also been able to attract a lot of quality travelers. The second thing that we other than the mice that we have been focusing and really work well, post-pandemic is the shift from the three years of yes, three years of sun, sea and sand for tourism in Indonesia into the new three as in additions, which is serenity, spirituality and sustainability. So there's a new strategy to attract more travelers which focus on trying to find a more personalized, localize, customised and yet smaller in size type of travel is really showing us the key. And in 2023, I was just reporting to a popular buyer that we jumped ten rankings in World Economic Forum Travel and Tourism Development Index to number 22. We nearly broke the top 20. So in ASEAN, our position is very strong and globally we are even ahead of Belgium, Turkey and New Zealand. So this type of quality tourism have.
Provided us with a whopping 45 to 60% increase in ARPA, we call it. Well in the telecommunication industries are boom, in our industry is ARPA average revenue per arrival. It used to be in a 900 to 1000 level for arrival of tourists. Today we're registering 1600s U.S. dollars per arrival. That means people are spending more and the average length of stay is also increased to more than two weeks. So this really help the recovery.
And finally, third is the focus on the digitalization, in particular in new destinations. We have Tourism Village that's very, very popular among Gen Z and millennials. They would like to go for hidden gem and through digitalization they were able to locate and identify this new experience. Unlike my generations who probably spend twice, maybe one time a year to do vacation. This young generations, they go on vacations every other week. So they say we need healing because otherwise we're going to have mental stress. This is populate the Instagram rise.
And, you know, they need to engage with their followers. So they need to showcase that they're actually work from destination. That's right. It's actually bodes very well for my industry. But I think this allow us to strategize more into tourism that create good quality jobs.
So for today, tourism created 25 million jobs in Indonesia. And with my other portfolio of creative economy, it's another 25 million jobs. And this is 50 million jobs that are really good quality and very, very close to the hearts of the Gen-z and the millennials.
Yeah, that's really interesting. I mean, you mentioned, for example, that the mice business is really strong for Indonesia, and yet we know that business travel hasn't completely come back yet. Right. How how do those two things square, square away? So to put it in perspective, business travel in Asia-Pacific actually came back 100%. It's more so in the West where it has lagged recovery. Now, the reality is, as we all came out
of COVID leisure led recovery, yeah, simple people came out and spend time with their families and friends. Right Soon after we started seeing mice started to come up. Obviously G20, the ASEAN chairmanship for Indonesia. And we also started to see that given much of Asia is driven by relationships, that people came out very early. So our corporate business actually had fully recovered by second quarter of last year. It's great
for Indonesia, for actually Asia-Pacific, China, which is really positive from that point of view. That's great. Now, Rajeev, I mean, obviously governments like Indonesia recognize the importance of travel and tourism to to the GDP. What more would you like to see in terms of cooperation between the governments and and industry that could really fuel more travel that's sustainable? So I have to say, Mark Zandi and I talk about him all the time, he's really been a role model in terms of being a partner in tourism, because when you think about the growth of tourism domestically and intra region, it has been really strong. We continue to see that as more FDI comes into ASEAN, particularly emerging middle class is getting out and traveling more, which means we we need more infrastructure spending from the government. We need new destinations. You know, sustainable tourism is not
just about continuing to drive more tourism into Bali, but President Jokowi's vision of creating those ten Balis. So we just recently opened a hotel in Labuan Bajo, great hotel. I stayed there, thank you. I couldn't afford though, with the government budget, but later on I after I finished my firm's in about six weeks, I'll stay in that hotel again. You are kind, sir, but to put it in perspective as. Destinations like Labuan Bajo or Ballito or Lake Tahoe continue to get developed.
We need more infrastructure. We need more air connectivity, more international airlift, because that's how you will see tourism thrive in these destinations. And from that perspective, you know, Sandy and his team have been incredible partners to the industry, and we hope that that trend is picked up by other governments around the region because it goes a long way in ease of travel and growing tourism in each of these markets. Minister, what do you think? What do you think governments like Indonesia can do better in terms of working with industry? I have Rajeev and Ramesh on speed dial. For those of you who
are Gen-z and millennials, you don't know what speed dial means, but you're familiar with speed dial through. So we are on always in contact. And I kept on asking through my deputy here, Kiki, what could we do more? Because I come from private sectors. I used to face the difficulties of private sectors dealing with government, with the attitude in the past, which has greatly changed during the last 20 years, whereby things that could be done today.
Why do it yesterday? Do it? Why don't we do it tomorrow? Now we change it. We anticipate what the industry would need and because of data, we're doing data driven policies and evidence based type of scenario planning. It really helps. And therefore, during the pandemic we were able to support industry by some of the programs that really could sustain the industry. And I'm so very happy that the scarring effect that we were worried in the hospitality industry, it's not happening. I came to this is one of the legendary hotel it used to call. It used to be called the Hilton in Bali.
Now it's called the Ayodhya. I stayed there when I was there last year. It was only one tower opening with 100. Today it's all 535 rooms open with 94%, and majority are from India, from Australia. So, you know, we were worried that they could not really rehire back some of the employees.
They were able to to go through it. Yeah. Are there specific, you know, government initiatives where where you feel like this could really move the needle in terms of working with industry or we need to continue to do the training and retraining and not just the normal training, but we need to go on upskilling because we need to strengthen their skill base. Reskilling because some of the skills that they used to have pre-pandemic is no longer applicable now. And new skilling there's new skills that they they would need. So we have about six.
Tourism polytechnic Institute across Indonesia whereby every year around 10,000 students would graduate and not only graduate, they are already absorbed by the industry, so much so that they didn't come even to the graduations. They we said, Please pick up your diploma. Oh, sorry, we're already working in Bali, but already working some in Dubai, some in Maldives. So this is something that we believe government needs to continue to work on, investment to the human capital aspect on hospitality, because that's one of the key elements of Indonesia's success in the tourism, nature, culture, adventure and human capital, such important work. Just to add to what Sandy just said, you know, for us three things have really played a key role. One is simple visa on arrival
from markets like in India, particularly China and a number of other countries has been a game changer because it's just allowed flow of tourism. Second, domestic air connectivity put in perspective, pre-COVID mix of our Indonesia business was in the high thirties. This year we are 47% and we have 77 open hotels across 16 destinations in Indonesia and a pipeline of another 42. This is a growth of 70% in terms of in Indonesian travelers to our to our business. And third, to Pakistan, Pakistani just talked about employment opportunities. You know, there was real fear because millions of jobs were lost during COVID.
Not only have we fully recovered, it's about preparing the generation for the future. Today, we have about three and a half thousand interns across ASEAN, 147 universities that we have and will use with where we continue to bring in new talent to train them and create this future pipeline. So I think at not much of this would have been possible if we did not have the government support. Yeah, no, Minister. I mean, one of the things when we talk about visas and visas, the ease of visa really obviously brings so many travelers to to the country. And I know some countries like Thailand
and Vietnam, for example, are talking about a Schengen style than what they have in the EU, right, where you basically have one visa and gets you around around the region. Is that something that Indonesia is also looking to to participate in, if that comes through? Yes. When you talk about ASEAN as a single destination, this is the low hanging fruit because Thailand attracted 40 million. Malaysia is about the same 40 million
ish and Singapore, Vietnam. We should offer an ease of moving within the ASEAN countries so ASEAN as a single destinations could be the low hanging fruit that that we could convert into a more quality tourism. Secondly is we believe that the visa free regime that we had in the past was changed during COVID and now we have the visa on arrival is something that we've been pushing to the president and other ministries because we were probably one of the very few countries that still have visa on arrival. Some of the countries our neighbours have scrapped the visa requirement and that's have enabled them to increase tourists visits. Post-Pandemic. Great. And is that a conversation that that
Indonesia is helping to lead in terms of. Yes, we have the ASEAN Tourism Forum. This forum is among the ASEAN tourism ministers and one of the resolutions that we have put forward for each country to adapt is the ASEAN type of a single destinations that covers the visa requirements.
So when you arrive in Indonesia, you would not need additional headache to go through immigration or other visa requirements. That's exciting. How soon do you think that might could be? I hope the next minister, because I'm I'm looking forward to my end of my tenure in six weeks.
I think the next minister should focus on this and to be finally implemented by the I centres and Forum in Johor Bahru in Malaysia, January 2025. That is exciting. Now, Rajeev. I know just from talking to a lot of industry experts that sustainability is obviously something that's so critical for the tourism industry, especially when you have so many millions of people arriving here here to Asia Pacific. And yet the industry seems here in Asia seems to be a little bit behind the curve still.
So what would you like to see in terms of how government and industry might work better to really drive sustainability and tourism forward? There is incredible opportunity. So let me just take a step back. As a company, we are the largest hotel company in the world and earlier this year we got formal approval from SBI for our science based targets, both for short term and long term carbon reduction goals. The company is very committed to 2015 net zero. What we have been doing now, putting very specific targets in place by the end of next year, we are having every single one of our hotels certified, you know, on energy usage. We are very focused on giving really 65% of carbon emission is driven by energy usage. So we are very committed to trying to get green energy.
Obviously working closely with governments, relooking at technology to improve energy usage. The other thing I would say is waste management, which in our business ends up being a big issue both on food, waste, water waste and so on. You know, reducing landfill. I'll give you a simple example where we are working very closely with Sandy and his team is in Bali, Marriott Business Council. We have some 25 hotels are working on a project called Sungai Watch, which is really clearing the river across Bali. And this has been an incredible effort, an initiative that Pakistan has called surplus, where's a lot of food that goes into the dustbin every evening is picked up by the teams and sold at highly reduced rate. Similarly, in other markets like Australia as an example, there's an organisation called Oz Harvest that is picking up this food from hotels across the board. So there's a number of initiatives, but
ultimately for us, we manage our business through balanced scorecard approach. So every hotel has been given very clear defined targets and we measure them against those because ultimately what is measurable is achievable. And we believe that if we need to get to net zero by 2050, we need to be very aggressive between now and our short term target of 2030 and then beyond. Now, what are you seeing in terms of the conversations with with the various governments across the region? Is there cooperation? Is there commitment to working together to establish some standards, for example? Yeah, we have been very active within the platform of UN tourism and to see some of our initiative, or we call it signature programmes is to make a program that would enable Rajeev or Sunita who were traveling from abroad to offset their carbon footprint.
And this is very popular in Bali, like last week conference, there are numbers of travelers who wants to plant their own mangrove trees or they would through our corporations, would send somebody to plant the mangrove trees and monitor digitally. So this is the type of green jobs that we think the industry is able to create in in a new settings whereby sustainability is is very key and I think not just planting mangrove trees but restoring the coral reefs or cleaning the river is it's very, very popular among travelers now and they want to travel with a purpose. So it is something that that we see. And if I could mention one more thing, that is what we are seeing post pandemic is traveling that is linked to music festival. Yes.
Huge. Right. The Swift. The swift. I got scolded by my president when we could not get swift. So I prayed. Prayed. We got Coldplay. Okay.
We got Ed Sheeran. Okay. Nobody got really that excited. And I prayed, you know, we need something big, otherwise I will lose my job. And then, boom, The announcement that Pope made the visit here.
There you go. So today you're sharing the limelight with Pope Francis is making the trip to Indonesia after 35 years from the last pope visit. So I think event based tourism is huge now. And we're going to have like Bruno Mars
for three days. This is exciting. And he Bruno Mars fans here. And and I think because of the size of the market in Asia and we need to have more flexibility. And next year we're going to launch the Indonesia Quality Tourism Fund together with Belgium. This is designed to attract good quality minds events as well as music or any other world class events in Indonesia. That's exciting.
Of course, there are headwinds all around us and we there were some numbers, economic indicators out of China that weren't so great. And I'm just wondering, you know, Rajeev, if you look around the region, what do you see as a major possible headwinds, especially as maybe the China slowdown continues? Well, consumer confidence in China is definitely on the weaker side, although outbound Chinese travel has rebounded. Now, again, from our perspective, we are 90% recovered.
Markets like Japan, Singapore, Malaysia, even Indonesia have seen full recovery on the Chinese travelers because the consumer that we were attracting was a little different than the mass Chinese travel. I also am concerned, as many other leaders are, about the geopolitical situation that the situation today in market like, say, Bangladesh or New Caledonia in my part of the world is concerning because it doesn't take too much to for these things to erupt quickly. So at any given time, be it impacts or, you know, some of the challenges we've dealt with with COVID, those learnings are very much upfront that we need to stay very agile because the situation in any market can change very, very quickly. But on the on the whole, tourism still
remains a bright spot across the world. Yeah, and of course you mentioned impacts. I mean, Minister, when we all check went through the airport, right, There's a new health declaration that we all had to fill out. And of course that's Indonesia's effort
to make sure that they're keeping an eye on on impacts. What do you think are some of the biggest lessons, maybe just one lesson learned from the pandemic in terms of what governments like Indonesia can do better to support tourism through these pandemics and possible health outbreaks? Data management. We used to have scattered data among government agencies, but during COVID, the big lesson learned is we pool all the data together. And now with the Indonesia, sad to say that all the data is now pretty much within within one pool of data that we can access. Secondly, preparedness because and box is is here already and we just have to reactivate some of the measures that we have during COVID, like the electronic health declarations.
And then we have the thermal scanners now on again. And we still have until now the my mask. Every now and then we because I, I have an 84 year old mum. So I, I never I visit her, I would use mask. So those type of behavior that we learned during COVID, I would say, and finally, I think there are a lot of headwinds and I term it in my ministry, the.
FOUKARA Volatility, uncertainty, complexity and ambiguity. So we as a government. That create policies have to be really 360 and front and center with the industry, with the communities, also with the media to make sure that we are part of this. Indonesia incorporated to prepare for the next challenges because we don't have much time.
Only 15 years left for us to turn to convert our demographic dividend. We call it demographic bonus into higher GDP per capita. If we lose time on this, we will miss the chance in 2045 for us to reach the developed and developed countries status. So that's why this government and I'm happy that the next government theme is continuity.
Unfortunately, I was not part of the winning team. I was too early by five years partnering with Robbo. But I'm very happy that we finally got the mandate from the people.
So with continuing the work that by spite Jokowi I have been doing would accelerate our economic growth and the prosperity of the people so that we could reach what we call our goal in Indonesia by the year of 2045. Yeah, very exciting goal. Last question to both of you. What's one change inflection point that you're seeing that could really change travel and tourism here for the region or that you'd like to see make it up? Well, from my perspective, what we are already seeing is the digital transformation and is going to have a tremendous impact on our world today. 35% of our business in Asia ex China is coming digitally. Now that is growing double digit year after year.
Now add the generative AI component to it, how we service our customers, the ability for people to, you know, travel, ease of travel. It'll be a game changer. And I think, you know, think about just Singapore airport for example sooner we won't even need passports and it makes a lot of difference for somebody who spends three weeks a month on a plane. You know, ability to go in and out very
quickly helps. And anything that makes travel easier, people are prone to, you know, do more of it. Huge difference. Yeah. Minister, what about. CEO generations.
Please state modifications. Well, with that. Thank you so much for your time, Sandy and Rajeev, if you please, give them a hand. If you've enjoyed these conversations that we've been having through the morning, I really invite you to please tune in to our latest podcast called The Big Tick. Asia. I actually hosted the show and one of the hosts and every week we basically take the biggest, most interesting, most compelling news story and really unpack that with our, you know, team of incredible reporters and editors and experts. And it's a really a great chance to kind of explore the themes and the issues that people and businesses in the regions are really encourage. You really invite you to take a listen
and give us some feedback. With that, thank you so much. And please join us for lunch behind those doors. Thank you.
2024-09-13 07:36
