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Galveston Capital - Digital Disruption Key to Achieving Indonesia's Tourism Targets: Minister

Jakarta. Tourism Minister Arief Yahya said the government will consider assisting entrepreneurs and private businesses to achieve its target of establishing 20,000 homestays across the country this year.

Speaking at this year's second national meeting on tourism at the Bidakara Hotel in South Jakarta on Thursday (18/05), Arief said government agencies will work alongside Real Estate Indonesia, academics, local communities and media outlets to provide more budget-friendly accommodation in priority tourism areas.

Arief added that positive digital disruption, or the emergence of game-changing digital services, will propel the industry in the coming years to allow the ministry to achieve its ultimate target of establishing 100,000 homestays across the archipelago by 2019.

"It is real; it is inevitable. Sooner or later, it will happen, it is just a matter of time before all companies, institutions or nations will be 'disrupted.' In the digital era, it will be swift," the minister said.

"Even companies with impeccable reputations, stalwarts of the 'old way,' must adapt to the new digital landscape to survive these changes," he added.

Arief cited online-based ride-hailing services such as Grab and Go-Jek as examples of new companies that have changed the conventional business landscape. He said traditional hotel agents have been usurped in recent years by the convenient and user-friendly services offered by companies such as Airbnb and Traveloka.

"These innovations are always seen as chaotic at first. They were initially ignored, because many people did not believe they could work. Well, they do," he said.

Realizing the massive impact of digital technology, Arief, a former director of state-owned telecommunication company Telkom, has been digitizing homestay management since last year.

"Now, 2,000 homestays have been registered on the digital platform belonging to the Indonesia Tourism Exchange [ITX]," he said.

The platform assists homestay owners to manage their businesses on par with world-class hotel chains.

"It is a must; it cannot be bargained anymore. Those who are not joining will experience difficulties in their businesses," he said.

However, Arief said the effect will be positive. It will increase the size of the market and value of tourism in Indonesia. Demand will increase, as the market consists of multiple sources across the globe.

"So, our cultural village homestays can be worldwide, not only operating in Indonesia," he said.

Arief said it can often take up to five years to build a hotel, which is considered high-cost tourism, while homestays, which constitute low-cost tourism, only take six months to establish.

"Interest in home-sharing is expected to increase from 10 percent [in 2016] to 15 percent [in 2020] in most major cities around the world. In Southeast Asia, the trend is also expected to increase from 2 percent [in 2016] to 5 percent [in 2020]. Therefore, I believe Indonesia will become the best and largest homestay manager in the world. It is a dream we can achieve together," he said.