Concerns Arise Over High Commissions Charged by Foreign Online Travel Agents in Indonesia

traveler in Ngurah rai Airport
traveler in Ngurah rai Airport

The recent entry of foreign online travel agents (OTA) into Indonesia’s tourism landscape has sparked concerns within the hospitality sector. The Indonesian Hotel and Restaurant Association (PHRI) has raised apprehensions regarding the high commissions imposed by these OTAs, casting a shadow over the industry’s collaborative efforts.

According to Hariyadi Sukamdani, Chairman of PHRI, hoteliers partnering with foreign online travel agents are grappling with the burden of disproportionately high commission rates. He expressed his worries, highlighting the absence of tax contributions from OTAs, which shifts the financial responsibility onto local hotels due to the absence of a permanent business presence in Indonesia.

“The significant disparity between OTA valuations and domestic hotel revenues threatens to impede market penetration for local businesses,” Hariyadi emphasized in his official statement on Thursday (22/2/2024).

The widening gap between OTA valuations and domestic hotel earnings poses a significant challenge to the recovery of hotel revenues, which are yet to reach pre-pandemic levels. Data from the Central Statistics Agency (BPS) reveals that hotel occupancy rates across Indonesia remained stagnant throughout 2023, failing to drive up room occupancy or average room rates.

Despite efforts to boost tourism, the anticipated increase in OTA market penetration to 45% by 2025 may face hurdles due to the adverse impact of foreign OTAs on local hospitality businesses. This predicament necessitates urgent action to mitigate the financial strain on domestic establishments and safeguard the long-term sustainability of Indonesia’s tourism sector.

In response to these challenges, PHRI has convened a National Meeting to devise strategies addressing the disruptive influence of foreign OTAs. Hariyadi stressed the importance of finding equitable solutions that balance the interests of all stakeholders while safeguarding the resilience of the local tourism ecosystem.

Meanwhile, tourism experts underscore the need for stringent regulations to govern the operations of foreign OTAs in Indonesia. Taufan Rahmadi, an Indonesian Tourism Strategy Expert, as quoted from Bisnis, advocates for collaborative efforts between the Ministry of Tourism and Creative Economy (Kemenparekraf) and industry stakeholders to formulate effective regulatory frameworks.

“Effective regulation is essential to ensure fair competition and protect the interests of domestic businesses,” Rahmadi asserted, emphasizing the importance of fostering a conducive environment for sustainable growth and innovation in Indonesia’s tourism sector.

As Indonesia navigates the evolving landscape of its tourism industry, stakeholders must work hand in hand to address the challenges posed by the influx of foreign OTAs. By fostering dialogue, collaboration, and regulatory oversight, the nation can navigate these challenges and chart a course towards a more equitable and resilient tourism ecosystem.