Top Trends in Indonesian Hospitality for 2016 With uncertainties aplenty surrounding the global economy and terrorism, the massive domestic market will continue buffering external impacts and driving the Indonesian tourism industry in 2016. This year, we expect to see the rise of the millennial traveler as a dominant new consumer group with social media increasingly impacting consumer purchasing decisions. In addition, the concept of conventional hospitality is morphing into a hybrid of technology and genuine personalized service.
The explosion of homegrown hotel brands are eager to win over this demographic, however in the race to market, brand identity and product differentiation are often times neglected. The results in many markets are price wars and a lower bottom line.
The explosion of homegrown hotel brands are eager to win over this demographic, however in the race to market, brand identity and product differentiation are often times neglected. The results in many markets are price wars and a lower bottom line.
Top Hospitality Trends that will shape 2016
The Millennial Mindset This mobile generation sees value in personalized experiences. They are driven less by brand loyalty and more by the search for unique perks and value for money. Quick to critique on social media platforms, they are the very definition of a modern hotel guest.
Sharing Economy/Online Integration Technology is becoming synonymous with travel due a combination of travel aggregators (eg Travelio, Traveloka, Tiket.com, Goindonesia & Travelindo) and sharing economy business models (eg AirBnB, GO-JEK and Uber) mushrooming across the country. And the tech explosion is still infantile, expect a far better, more synergistic integration of hotel and travel services creating individual experiences in 2016.
Travel Domestically A survey conducted by Hotels.com Indonesia at the end of 2015 revealed that six out of ten domestic tourists prefer to visit domestic tourism sites. Remote destinations such as Derawan, Labuan Bajo and Tana Toraja are increasingly popular as incomes increase and people outgrow urban tourism and Bali/Yogyakarta.
Homegrown and Lifestyle Homegrown chains such as Archipelago, Tauzia, Whiz, Zuri, Santika and Horison continue flagging hotels apace with bulging pipelines. In addition, there are brands aplenty, catering for every niche imaginable from Frii (PHM) to Artotel to Meotel (Dafam) to Berry Glee (Avilla) to name a few. Expect more brands and more chains in 2016.
Hotel Renovations Wise hotel owners will use 2016 as the year to revitalize their older hotels with fresher looks, appealing to the new generation of travelers and to compete with the plethora of new hotels. It’s not just the rooms that are being revamped; you will see upgraded lobbies, reconceptualized F&B outlets and seamless technology.
Brands & Mixed Use Developments .As central land prices soar, hotel profitability is squeezed and brands proliferate, developers will continue to embrace mixed-use projects with hotels attached to commercial, residential, sporting and tourism attractions. In 2016, expect Indonesian developers to continue creating their own integrated mini-cities in suburban locations thereby monetizing huge land banks bought when prices were reasonable. Accessibility is a key to success for this kind of development.
Brand Combos & Shared Services. The theory is: 2 brands are better than 1 at attracting a broader market demographic and it’s cheaper to develop and operate. Accor introduced the brand combo to Indonesia with the Novotel / Ibis Balikpapan combo in 2012. Expect Swiss-Bel, Tauzia, Archipelago and Accor to open more brand combos across the country in the near future. In addition with more hotels opening, owners should experience cost reductions for shared services in 2016.
Travel Insurance is a New Cool Accessory .Increased incidences of lost luggage, flight delays and/ or cancellations are forcing travelers to splurge on travel insurance whether it’s personal or as an add-on option from the airline. This will continue in 2016 with overcrowded airports and increased air traffic.
Visa-Free Tourism Boom. The somewhat protracted introduction of visafree entry to Indonesia for the lucky 160+ countries is now fully operational. Come tourists, come. In reality, we anticipate foreign tourist arrivals growth in 2016 from the traditionally large source markets of Singapore, Malaysia, Australia, China and Japan.
Destinations Beyond Bali. Dubbed the “10 New Balis”, the Ministy of Tourism’s prioritized tourism destinations in 2016 are Lake Toba (North Sumatra), Belitung (Bangka Belitung), Tanjung Lesung (Banten), 1,000 Islands (Jakarta), Borobudur Temple (Central Java), Mount Bromo (East Java), Mandalika Lombok (West Nusa Tenggara), Komodo Island (East Nusa Tenggara), Wakatobi National Park (Southeast Sulawesi) and Morotai (North Maluku).
Brand Consolidation. Indonesia has more than 50 homegrown operators offering more than 130 different brands ranging from economy/budget to luxury. Offering this many brand creates fierce and unsustainable competition amongst the chains where corporate costs are increasing. In a world bigger means better, we expect consolidation of local brands to begin in parallel with the consolidation of international brands in 2016.
Note: This article was first published in the 2016 Hospitality Investment Conference Indonesia Programme, part of the Hospitality Investment Series by Sphere Conferences. The conference took place on 26 and 27 April 2016 in Jakarta.
Horwath HTL
Matt Gebbie,
Director Pacific Asia
+62 21 2555 85 84
[email protected]
www.horwathhtl.asia
www.horwathhtl.com
Cover Photo: Mandapa, A Ritz-Carlton Reserve Hotel Bali
