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Bring all disparate elements together and follow the same agenda.
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The sequence of events following October 12, 2002 and the current situation in Bali can be roughly outlined as follows:
Tourism Visitor Arrival Impact
As a result of the horrific bombing in Kuta, on October 12, 2002, the Bali-based tourism industry has been affected by an unprecedented downturn in arrivals. Tourism industry enterprise profitability has been temporarily decimated. Immediately following the incident almost all visitors departed and arrivals dried up to a trickle.
There was a brief upturn after Christmas 2002, but this is seen by local hoteliers as having been generated from long-established short-haul origin market customers of Bali returning (regional traffic and the expat market). The Singapore Airlines backed “Enchanting Bali” programme has generated traffic but this, so far, has not resulted in broad based “quality business for Bali.” Instead it has resulted in low-cost holiday tourists that spend relatively little in the destination.
New long-haul arrivals have dropped to less than 20 percent of former levels as a result of a succession of “don’t travel to Bali” (and Indonesia) advisories which emerged in the aftermath of the bombing as a direct result of the perceived increased probability of further terrorist violence. These travel advisories were issued by governments of key tourism producing and bellwether countries including Australia, the United Kingdom and the United States. Other key countries have altered their travel advisory levels, including Japan (downgraded), the Netherlands and Spain (removed).
As a result of these advisories, even travel producers who would like to sell Bali are often constrained by their government’s regulations (or insurance companies), which advise against travel into an area of perceived high risk. Fortunately, there is a strong positive feeling among both travel producers and end users (the travellers themselves) for Bali, but this force can only be channelled to allow visits if it is truly safe to do so.
The lack of the usual tourist population is now beginning to “bite” into the local community with dramatically reduced earnings for companies and for their frontline employees. Staff members in many organisations (such as hotels and inbound operators – DMCs) are receiving between 10 and 20 percent of usual earnings, most well below long-term family subsistence levels.
According to a World Bank Report[1] hotels and restaurants alone employ around 58,000 people in Bali, some 3.3 percent of the labour force, and contribute 21 percent to the provincial economy. If retail trade, manufacturing and construction are included it can be aruged that tourism is responsible for more than half of Bali’s total income.
It is therefore easy to understand why with no action, another crisis situation is poised to unfold.
Action is required to avert both an earnings disaster for staff as well as the unrest in the community that might arise.
Terrorist Activity and Violence Outlook
The original perpetrators of the October 12 incident have been traced to an extremist fundamentalist Islamic group on the island of Java (possibly supported by the al Qaeda organisation through their Southeast Asian network). Several key players in the incident have been apprehended by an international consortium of law enforcement agencies and the first of the perpetrators will be tried at a court in Bali in April 2003.
The commencement of a trial, so near the bombing scene, has the potential for both positive and negative sentiment among interested parties and Australia in particular will be watching these proceedings closely.
“High threat-don’t travel” advisories continue to be sustained by statements of captured individuals. Interrogation of these individuals has indicated that organisational followers will continue to attempt to follow the traditions of these organisations (bombings on key religious holidays, anniversaries of other events etc.). Also, the statements of those individuals apprehended (both in Indonesia and elsewhere) have reiterated strategies that underscore threats to attack soft targets including bars, clubs, restaurants and places of worship, all locations frequented by tourists.
This situation is made more complex by the likelihood of military action in the Persian Gulf and the possible unrest that may arise as a consequence, in various communities in Asia and around the world. These twin activities have caused key opinion-maker governments to leave travel advisories at existing levels in spite of an on-the-ground improvement of the security situation in Bali.
The Tourism Community
Historically, the tourism industry in Bali has enjoyed a uniquely positive situation. With little direct promotion, the allure of Bali has brought a bountiful harvest of a wide range of visitors from throughout the world. This included both high-spend individuals who stayed in resorts such as the Four Seasons as well as MICE business patronising five-star hotels. In addition, the low cost of accommodation and services frequently brought both top and mid-level wholesale as well budget travellers to various locations in Kuta and Ubud. The entire community benefitted from this diverse product base.
This strong market mix is not the result of high quality marketing of any individual organisation, but rather, an almost accidental combination of forces. This included travel producers, opinion-maker media and strong visitor satisfaction ratings.
The following table outlines the volume of foreign arrivals to Bali for the year 2001 and their relative position in the market mix.
Direct Foreign Arrivals to Bali by Origin Sub-region[2], 2001
| Origin Sub-region | 2001 | Rel. Share % |
| The Americas | 97,828 | 7.2 |
| Europe | 430,214 | 31.7 |
| South Asia | 6,396 | 0.5 |
| Northeast Asia | 487,237 | 35.9 |
| Southeast Asia | 54,664 | 4.0 |
| Australia/New Zealand | 264,875 | 19.5 |
| Other Pacific Asia | 4,102 | 0.3 |
| Other countries | 11,458 | 0.8 |
| Total | 1,356,774 | 100.0 |
Source: Bali Tourism Authority
Even in the face of a relatively weak performance by Indonesia’s national air carrier, Garuda Indonesia, Bali’s tourist arrivals were supported by other air carriers such as Singapore Airlines and Qantas, as well as Asian-based carriers like Thai Airways International, Malaysia Airlines and Cathay Pacific, each of whom brought a continuous stream of visitors from points near and far as part of their regional networks.
A series of sequential developments appeared on the Indonesian national scene during the 1990s – the 1997 financial crisis, the 1998 change of power, the separation of Timor and the national elections – and these created a series of critical situations at the national level. As these activities were principally focused in Jakarta, Bali (as well as travel producer customers) chose to separate from the increasingly negative national image of a country fraught with serious problems.
Bali was particularly successful with this strategy and achieved a status in travel advisories of tourism origin markets where all Indonesian advisories carried an “except for Bali” statement. As a result, Bali continued to be promoted as a peaceful oasis outside the influence of the dark forces that were plaguing the rest of Indonesia during this era of turbulence.
On October 12, 2002, this image of separation from the rest of Indonesia was destroyed and Bali was suddenly lumped together with the rest of the country as a destination with a perceived high risk of terrorist threat and action. Bali’s image as a safe haven from the ebb and flow of activities in the rest of Indonesia came crashing down.
Even with a long history of problems and a lack of clear institutional structure, tourism arrivals continued to climb almost in spite of local and national efforts. The national authority perceived that it was occasionally competing with Bali as the jewel in the Indonesian crown while the Balinese only felt the need to appear under the national umbrella when it suited them.
On the island of Bali, with about 3.5 million people and approximately 200 major tourist enterprises, there is a separation of views, perceived strategies and universal mistrust among the organisations that should be charged with close cooperation in the development of promotional responsibilities. Each grouping has their own agendas, initiatives and discussions that are often quite close in content and aspiration but often dramatically different in implementation strategies.
In recovery, the key parties must choose whether to assemble and act together or to maintain separation. It might seem an easy choice at first but there are merits to both joining with the national Indonesian entity as well as remaining separate.
The feeling of the PATA Bali Recovery Task Force is that joint action on the parts of both Indonesia and Bali must occur in order to secure a solution. This said, it should be agreed that there will be times when both a unified approach combining local and national agendas and a “go separate ways” for Bali is preferable. The formula must be outlined and agreed upon as part of the plan.
Recommendations:
Given the depth and breadth of problems, a broad-scale plan should be prepared which would outline wide-ranging action.
While this may eventually prove desirable, a series of short-term actions would bring fairly immediate benefit to the entire community and this can be projected forward to, for example, May 1, 2003.
In terms of proposed outcomes and focusing on the restoration of confidence in Bali as a destination, the following steps need to be actioned as soon as possible:
1) Travel advisories from key producing markets, e.g. Australia, UK, USA, should be lifted or softened.
2) An outreach campaign to origin travel market participants (wholesalers, meeting/conference organisers, airline decision makers, government representatives etc.) should be implemented.
3) Security and safety systems need to be enhanced to new levels and information about these systems extended to market participants.
4) A communications programme blueprint must be agreed upon and implemented immediately.
5) Industry cooperation must be initiated among organisational players, including
- The ASITA Bali chapter
- The Bali Chapter of the Hotel and Restaurant Association
- The Casa Grande association
- The DMC grouping
- The Bali Government
- The Bali Tourism Authority
- The National Police in Bali
- The Military & Security in Bali
- The Government of the Republic of Indonesia
- The Indonesia National Tourism Authorities
- The PATA Bali Chapter
6) Industry leadership needs to be restructured for the future, agreed upon, empowered and actioned.
7) A strong bridge needs to be constructed between the Jakarta-based Culture and Tourism Ministry and Board and the Bali-based Provincial Bali Tourism Authority.
8) Key industry leaders need to be identified (possibly but not necessarily PATA members) and arrangements made for visits to Bali to assess destination conditions and develop reports and press materials which can be treated as credible in their origin markets.
9) A local task force needs to be created to achieve short-term objectives. One of the key challenges in Bali is a deeply fragmented and distrustful industry that is further complicated by the bi-polar axis of Balinese and Indonesian governments. One of the key strategies of the PATA Bali Task Force must therefore be to facilitate dialogue among all the players and organisations to progress the possibilities for true industry interaction and partnership.
With this in mind it is suggested that a new consultative body – the Bali Tourism Industry Council (BTIC) for example – be formed with the objective to bring all organisations together for monthly closed-door meetings. These meetings should first be facilitated by a non-biased, neutral body and later the responsibility delegated to a joint chairmanship.
To be successful, this body will need to be all-inclusive and should comprise key organisational representatives of at least the following:
- The ASITA Bali chapter
- The Bali Chapter of the Hotel and Restaurant Association
- The Casa Grande association
- The DMC grouping
- The Bali Government
- The Bali Tourism Authority
- The National Police in Bali
- The Military & Security in Bali
- The Government of the Republic of Indonesia
- The Indonesia National Tourism Authorities
- The PATA Bali Chapter
And the task force make-up is recommended as follows:
Coordinating level
An Advisory Board consisting of senior representatives from government and private sector groups plus members of the PATA Task Force.
Action level
Up to 10 individuals seconded from front-line organisations in Bali or secured from external resources noted for their specialist skills.
The task force should carry out the following functions and responsibilities:
Leader (Leadership role offering guidance and management as well as coordination with Indonesian and Balinese governments);
Security Specialist (Conduct independent security assessment of Bali-based organisations and facilities including hotels, airports and transportation);
PR/Communicator (Assemble, develop and disseminate the same message/information to fulfil an information outreach campaign. Commission an informational video that can be included on a CD-ROM that should have wide distribution);
International Government Liaison (Develop communication channels and liase with governments, embassies and consulates where travel advisories exist, to provide a continuous flow of updated information);
Creative/Designer (Work with PR/Communicator to develop common branding standards and to develop initial promotional material to support an overall campaign);
Jakarta Liaison (Given the developments of the Jakarta-based “Bali for the World” project, a liaison person based in Jakarta to provide direct liaison with the Jakarta- based Tourism Department will be essential);
Recorder/Administrator (Maintain communication between key parties and record minutes and action notes for key meetings);
Finance (Provide a framework for funds acquisition and management outside normal channels).
It is recommended that the individuals employed to fill the above positions be seconded from key Bali-based organisations, with the exception of the Jakarta Liaison.
Given the level of commercial activity at present, individuals with these skills should be readily available from within the local commercial community. The security specialist should be outsourced and the PR specialist can either be outsourced or secured locally if a suitable individual is available in Bali.
It is also suggested that members of the PATA Bali Task Force should be involved as advisors in their specific areas of specialisation.
It is our view that the ideal joint leadership candidates for the task force are Dr. Pitana of the Bali Tourist Authority and Setyanto P. Santosa of the Indonesia Culture and Tourism Board. While a joint management situation might seem unwieldy, there is a vital need to bring the institutions together.
10) Funding is obviously an issue and an ideal approach to obtain this – in the short-term at least – is the Indonesian foundation or Yayasan wherein external donors (governments, companies, individuals, external foundations and international bodies such as the UN and WTO) can be encouraged to donate funds and services with the knowledge that they will be distributed and managed without leakage.
11) Another key issue for the future will be the acquisition and management of long-term funds for tourism promotion and projects. Currently, the tourism tax collected from organisations in Bali either goes to the provincial government or to the regencies in Bali, neither of which are very focused on international promotion of destinations. Little finds its way into real tourist promotion.
Early success in the management of the task force will help to determine long-term support for this element of the project.
12) Bali also needs an assortment of updated promotional materials ranging from videos to brochures featuring the various activities and events that make the island an attractive destination. Given the capabilities of multimedia promotion, these should receive early priority.
Required almost immediately are:
i) First-class video footage to be assembled into a modern-day video that targets the post-bombing issues. This footage should focus on the people, festivals, arts and music; all of which are hallmarks of Bali.
ii) High quality photography to support a variety of other promotional projects.
13) The major tourist organisations involved in Indonesia have neither reacted effectively to the current situation nor provided the institutional leadership necessary under the circumstances. This is not surprising under the unique new circumstances of this post Bali-bombing era.
While the lack of coordinated action is understandable, it is not desirable that it continues. There is potential for economic disaster and prompt action is necessary. Presently, one of the key weaknesses is lack of a structural relationship between the Indonesian Tourist Organisation and Bali as a destination.
Historically, there has been little long-lasting promotional activity offering assistance to international travel producers selling Bali and Indonesia in partnership.
Malaysia, like Indonesia, is a country with diverse ethnic communities and equally diverse geography. Each state in Malaysia has its own domestic tourist board as well as the national tourist organisation. They also have a Tourism Ministry and regulatory body.
The Malaysian scenario, in particular, with reference to the states of Sabah and Penang, should be examined carefully. It is likely that they will be able to contribute and recommend a suitable interface approach.
Singapore offers another good example from which to learn. The Singapore Tourism Board is a highly sophisticated promotional mechanism and structure that focuses on leisure, marine and commercial (MICE) tourism through its various divisions and utilising its own ethnic diversity. This includes (as an example) local fund grants to events like the dragon boat races, kite flying and Nine Emperor God festivals that can, in themselves, become tourist attractions.
Yet another useful element of the Singapore scenario is the Singapore Convention and Exhibition Bureau. A similar entity needs to be established in Bali to lure events from both the domestic and international marketplace. This should be closely tied to the Bali International Convention Centre (BICC).
In summary, while there are many apparent improvements and initiatives that could be supported, it is recommended that the activities proposed throughout this report, particularly at the outset, be undertaken on an achievable objectives basis to ensure that solutions put into place are observed and supported by the community.
Once progress is demonstrated, the potential “buy in” from all organisations is much more likely. Ideally, the structure outlined above will be successful and over a reasonable period of time can be adopted by the local community as its own. However, PATA should remain engaged in the process until this is achieved.
[1] Confronting Crisis: Impacts & Response to the Bali Tragedy; January 2003
[2] Recorded by Nationality
