Cover Story / March 2018
With strong prospects for the growth of the tourism industry, sustainability issues will determine the shape of its future. The sector need to become more environmentally friendly, create positive impacts on local communities and at the same time provide them with economic benefit. Disruptive technology is helping the industry become sensitive to these goals and creating more opportunities for people to become small tourism operators.
By Albert W Nonto
Around 1.2 billion people went traveling across the world in 2016, according to United Nations World Tourism Organization (UNWTO) estimates, up 3% from the year before and a figure expected to surge to about 1.6 billion in 2025.
For over 25 years, world tourism has directly contributed 3.1% of growth in gross domestic product (GDP) and supported millions of workers. It generated $7.6 trillion in income, 10.2% of global GDP and created 292 million jobs in 2016, equivalent to 1 in 10 jobs in the global economy.
The sector accounted for 6.6% of total global exports and almost 30% of total global service revenues, giving it a stronger role compared to the growth in financial and business services, manufacturing, public services, retail and distribution and transport sectors.
Indonesia has earmarked the industry to take a leading role in the economy in the future, replacing oil and gas. The sector already plays a significant role in generating revenue, although it remains less important than agriculture.
By 2016, the sector had become Indonesia’s second biggest foreign exchange earner, raking in about $13 billion, after crude palm oil at about $15 billion. By 2019, the government targets the sector to be in first place, making about $25 billion in foreign exchange earnings.
More and more investment is going into the industry across the country. Investment of $602 million in 2013 in hotels, tourism attractions and other associated enterprises jumped to $929 million in the first half of 2017 alone, equal to 3.75% of total national investment. In the near future the sector is expected to dominate the economy, outpacing resource-based industry.
Yet at the same time that tourism is booming, the people who have to live in peak tourism destinations are increasingly annoyed by the impact of the industry on their lives. Residents of Venice, Barcelona and Dubrovnik are rebelling against hordes of day-trippers. Bali is often overwhelmed by tourists, some of them disruptive to the local culture.
UNWTO initiated a campaign in 2017 to make sustainability a core issue in future tourism development. The organization defines sustainable tourism as tourism that takes full account of current and future economic, social and environmental impacts, addressing the needs of visitors, the industry, the environment and host communities.
Sustainable tourism should, firstly, make optimal use of environmental resources that constitute a key element in tourism development, maintaining essential ecological processes and helping to conserve natural heritage and biodiversity.
Secondly, tourism should respect the socio-cultural authenticity of host communities, conserve their built and living cultural heritage and traditional values, and contribute to inter-cultural understanding and tolerance. Finally, it should ensure viable, long-term economic operations, providing socio-economic benefits to all stakeholders that are fairly distributed, including stable employment and income-earning opportunities and social services to host communities, and contributing to poverty alleviation.
These principles apply to both the existing tourism industry and to new and unique tourism destinations. Thus, the industry has to make the sector more inclusive to promote sustainable economic growth. It has to create more social inclusiveness by means of creating more employment, promotion of gender equalities, and to use energy in a more efficient way, protect the environment and respond to climate change issues. Tourism must conserve cultural values, diversity and heritage and actively promote world peace, mutual understanding and security.
That collection of aspirations is often far from reality. As with many other industries, tourism has often developed without much concern for its impact on the local people, economy and environment. Many can identify with the need for implementation of UNWTO’s key indicators.
At Labuan Bajo in East Nusa Tenggara on the western tip of Flores island, most hotel workers in the booming tourism industry come from outside the region. Lack of human development in the region has caused a social gap, leaving local residents to pick up the scraps. Situated in an area with scarce water supplies, the burgeoning township urgently needs to apply technology to desalinate sea water for its water supply rather than relying on ground water.
In Bali, local people enjoy only a small part of the business generated by tourism, with the lion’s share going to investors. Then there is the cost of environmental strain related to wasteful practices at hotels and the excessive expansion of the property market.
The Balinese have expressed concern over traffic congestion, pollution, poor waste management and the change of land function that has turned the island into a massive resort and hotel development. “Most importantly, we feel that local people can get only a small piece of the cake that is the industry,” says Made Suardana, a Balinese.
Much effort is going into the tourism business to help make it more sustainable. Many hotel operators are using solar panels to generate electricity, realizing that doing so will not only cut their power bills but also boost their image with customers. They also try to improve efficiency of water and energy consumption by applying strict rules and regulations, even though this may impact their bottom line.
While the majority of the tour and travel industry is still far from sustainable, some hotels and resorts have successfully applied sound principles. The Nihiwatu resort in Sumba in East Nusa Tenggara was voted best resort in the world for its sustainable operation. The resort employs 90% local people while also working to conserve local heritage and culture.
Sesaot Village in the Narmada region of West Lombok is a natural tourist destination owned and managed by the local people with government support. The area covers 5,935 hectares, with 57% natural forest and the remainder plantation forest. Simple homestays provide accommodation, and the number of tourists who visit the area is increasing. The conservation of the forest has improved the local microclimate, making it greener and cooler than before.
Sempu Island is another tourist destination that is attracting attention, situated to the south of Malang in East Java. This protected forest area covers about 877 hectares and is managed by the local government. Tourists who want to go trekking through the paddy fields of Yogyakarta and talk to local farmers can pay a dollar each to join Jelajah Sawah Pertanian Bowongan (JSPB) in Mangunan village, Dlingo, Bantul.
Visits to the turtle conservation center at Pangumbahan at Ujung Genteng in Sukabumi regency or to another turtle conservation site in Kota Pariaman, West Sumatra are among the more recent additions to Indonesia’s educational tourism destinations. Thousands of visitors flock there to experience the conservation process from the beginning until the release of the turtles to the sea.
Panorama Group, Indonesia’s largest integrated tourism industry company, is working with German organization GIZ and the Ministry of Cooperatives and Small and Medium Enterprises to train local people to become tour operators at a very basic level. Training focuses on issues such as communications skills, tour planning and services and English skills.
A hotel and resort operator in Ubud in Bali trains local handicraft artisans. Instead of selling their products to a sole distributor in Denpasar, he educates them to turn their homes into show cases, trains them how to deal with customers and the women how to cook and serve good food.
Sustainable tourism endeavors can also be found in destinations such as the villages of Billebante and Sembaun in Lombok. Improvements to the handicraft center at Sukarbella, Banyumulek has helped put it back on the tourist route. Small-scale batik centers are mushrooming in Yogyakarta, Pekalongan and other batik centers in Java.
Most tourists now use on-line travel agents (OTA) which offer convenience and transparent prices. Technological changes have meant that small tourism operators also have to adapt. With lots of noise in the startup business, some big names are successfully reshaping the games. Local startups traveloka.com and ticket.com have proved successful, with traveloka.com achieving unicorn status with a value of over $1 billion. Global websites and apps like tripadvisor.com, Airbnb, airyroom.com and many more also trade in the Indonesian tourism market.
The chairman of the Indonesian Employers Association (Apindo), Haryadi Sukamdani, grumbles that the likes of Airbnb are avoiding paying tax in the country, but agrees that the tourism business has changed dramatically, in the process creating more of a sharing economy. Deciding that the only way to fight the major international websites was to join them, Apindo last year launched bookingina.com, although the site has yet to get started.
Panorama Group spokesperson AB Sadewa sees that many tour operators, hotels and transportation companies are now in tune with the disruption of the internet. He believes the sector needs to be managed collaboratively. “We already notice the sharing economy trend is on the rise in the tourism sector. This sort of collaborative economy has real meaning and can create more social equity,” he says.
The government has launched a digital tourism campaign that outlines the importance of technology to boost the tour and travel business. Some initiatives have already been taken. Solo, Central Java-based startup TripOnYu.com won an award from UNWTO for its innovative creation of a marketplace that encourages local small businesses, local cultural tourist destinations and professionals to list on its platform. Still less than two years old, hundreds of local groups have used the service to develop independent tourism operations.
Millennials as the backbone
Many believe that 70 million Indonesian millennials about to move into their prime spending years are poised to reshape the economy. Their enthusiasm for unique experiences will change the way people buy and sell, forcing companies to examine how they do business over the next decade. “One thing needs to be remembered: this generation also has the capacity to make the economy of tourism work in a fair, transparent way and create more impact for their peers and people in general,” says TripOnYu founder Augustinus Adhitya.
Many research studies indicate different consumption patterns between baby boomers, generation X and millennials. Millennials spend more money for leisure rather than for goods such as houses, cars and other consumables. Garuda Indonesia president director Pahala N Mansury confirms that instead of spending money to buy branded bags, millennials are happier to spend their money on travel, dining and entertainment.
JP Morgan’s latest survey on millennial consumption patterns indicates that the generation spends about 34% of their money on experiences, while the typical generation X individual spends around 27%.
To the millennials, experience beats belongings (see table). With less use of private cars, more creativity and a tech-savvy attitude, they will also drive the push toward more sustainable tourism everywhere in the world
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