The Pandemic Effect: Downfall of The Late Great Tourism Industry in Indonesia

Updated: Apr 7

The outbreak of Covid - 19 has created several circumstances surrounding the changes in financial behavior, in this case, Indonesia. Research shows that the outcomes caused by this pandemic refer to unusual changes in different sectors of the economy. One of the few common sectors restraining a significant effect towards the pandemic is the tourism industry. This indicates how the industry adapts during the pandemic due to losses on income and development.

Based on data from UNWTO, it is possible to measure the impact of the Covid - 19 pandemic on the global tourism sector. The data shows that there are 120 million tourism-related jobs that are under threat during this global pandemic. It is estimated that the world economic loss will reach USD 1 trillion in 2020 alone. Sure enough, this is the case with the tourism sector in Indonesia. Being limited by the number of foreign tourists will undoubtedly have Indonesia’s tourism industry’s cash flow decreased, especially hotels. The absence of income and the cessation of operation in the hotel industry in Indonesia might affect the stock prices of hotel groups listed on the Indonesian stock exchange.

This decline was caused by the demise of Indonesia’s economy, which made people fear the Indonesian Hotel Industry’s uncertainty, so that people flocked to sell their shares. Based on data and analysis of the JCI percentage figures, there is a significant decline in the tourism sector. The Indonesian Journal of Development Planning Volume IV No. 2 - June 2020 decreased 49.17% in (Room Occupancy Rate) Star Class Hotels in Indonesia. The tourism industry also faces a series of challenges followed by a decline in tourist arrivals, such as vast booking cancellations in hotels, flights, and other travel essentials. The decline also occurred due to a slowdown in domestic travel, mainly due to people's reluctance to travel. It is worrying that the impact of Covid-19 might also affect MSME businesses and disruption of employment. Even though so far, tourism is a labor-intensive sector that absorbs more than 13 million workers. This figure does not include the derivative impact or the multiplier effect that includes the derivative industries formed under it.

Based on a theory from “Amadeus’ Destination X: Where to Next,” Asia Pacific travelers show several more than 34% of travelers who favor their preferences towards the knowledge of COVID-19. This information also accounts for prevention measures on travel and other mandatory accommodations. In Indonesia, popular tourist destinations emphasize substantial over-tourism issues, meaning that governments are forced to limit the number of tourists and close numerous iconic sites to prevent overcrowding.

There are several measurements on the accounted phenomenon following the tourism industry regarding international growth. United Nations World Tourism Organization (UNWTO) estimated a significant percentage in the down growth of foreign visits amounting to 1-3% in 2020 globally, and 3-4% during early January of 2020. In Indonesia, the percentage of foreign visits decreases as much as 7.62% from January 2020 compared to December 2019. This also means the total amount of visits lead to 1.37 to 1.27 million.

Revised 2020 forecast - International Tourist Arrivals, (% change)

The decline in foreign visits also estimates the amount of foreign exchange throughout financial measures, amounting to