THIS report by Redseer takes a look at the online travel sector in Indonesia. The likely easing of travel restrictions in Indonesia (and the rest of South-east Asia) offers a possible case for a sharp improvement in the travel sector in the coming months. Here are some findings from its recent study.
1. Travel was hit in 2020 due to pandemic-imposed lockdown restrictions
Indonesia enjoys a high level of domestic and international travel in comparison to other emerging markets. Covid hampered travel plans for citizens in 2020 due to long lockdown periods. Only 3.6 million foreign tourists visited Indonesia from January to September 2020, a 75% drop from 2019. Further inbound foreign travel restrictions severely impacted the online travel market in 2021. However, as consumers yearned to try new experiences from home, there was a massive adoption of online experiences and food delivery services.
2. However, consumer sentiment remains positive towards online travel
Consumer spending on travel-related offerings declined during the lockdown periods. However, as cancellation and refund policies gradually improved across the travel industry, consumers became more confident in their online travel purchases. Most players offered free cancellations as well as unlimited flight and accommodation reschedule until the end of 2021. Overall, consumer sentiment on travel for the rest of the year remains positive.
3. Travel companies have been diversifying their revenue models and have wrapped up recent funding interest
Online travel operators such as Traveloka have ventured beyond their core travel product and services to include financial offerings, on-demand service lines like food delivery. The diversification of the business has paid off for the company. It is now aiming for an IPO, as per media reports. Similarly, AirAsia Group has pursued diversification into digital services.
4. With borders opening up we expect the travel sector to surprise in late 2021/early 2022
The government’s one million jabs a day goal has accelerated Indonesia’s vaccination rate. Furthermore, there is a strong push for green zones for regions such as Bali and Batam to open borders to foreign nationals to speed up economic recovery for these tourism-dependent regions. The government plans to open the nation’s capital by September 2021. With the rest of South-east Asia ramping up its vaccination rate we estimate the travel market to reach around a quarter of pre-Covid levels in 2021. We expect a bounce back in online travel with a forecasted $49 billion market size in 2022. These estimates assume that the pandemic eases out towards the end of this year and that there are no further serious waves/virus variants.
Mapping of steps to border re-opening, 2021-2022
• Featured image credit: Getty Images
