Strong Growth in Tourism Sector Boosts Hotel and Restaurant Tax Revenues in Indonesia

Strong Growth in Tourism Sector Boosts Hotel and Restaurant Tax Revenues in Indonesia (photo: jay wennington - Unsplash)

The dynamic activities in the tourism sector have resulted in a remarkable surge in hotel and restaurant tax revenues until May 2023, surpassing the figures recorded in 2022.

Based on the records provided by the Ministry of Finance, the upward trend in tourism activities is notably demonstrated by the notable increase in the number of foreign visitors, commonly known as foreign tourists.

The Ministry of Finance has reported that the total number of foreign tourist arrivals in the country has reached an impressive 865,810 visits as of April 2023, indicating a nearly threefold growth compared to the same period in the previous year.

Within this influx of visitors, it is worth highlighting that tourists from Malaysia account for the largest share at 17.01 percent, followed by Australia at 12.69 percent, and Singapore contributing 11.24 percent to the overall numbers.

When observing the cumulative data, the total count of foreign tourist arrivals from January to April has impressively reached the milestone of 3.17 million visits. Concurrently, the occupancy rate of star-rated hotels in Indonesia has shown positive signs, recording a notable increase of 7.14 percentage points to reach 41.37 percent in April 2023, compared to the previous year.

This upturn in tourism activities has contributed significantly to the strengthening of regional economies, primarily driven by the notable growth in consumption-based tax revenues. These revenues encompass various taxes, such as hotel tax, entertainment tax, restaurant tax, and parking tax.

Focusing on the realization of hotel tax revenues alone, the government has successfully collected a substantial amount of Rp3.52 trillion by May 2023. Such figures reflect an impressive growth rate of 96.4 percent year-on-year.

When examining the regional breakdown, it is worth noting that hotel tax revenues in Bali have witnessed an outstanding surge, reaching Rp1.23 trillion, which indicates a remarkable increase of 863.4 percent compared to the previous year’s figure of Rp128.17 billion.

It is important to highlight that the positive trend extends beyond Bali, as the hotel tax revenues in East Nusa Tenggara (NTT) have also experienced a noteworthy growth of 46 percent year-on-year, rising from Rp18.30 billion to Rp26.74 billion in May. Similarly, Yogyakarta’s hotel tax revenues have demonstrated a significant increase of 46 percent year-on-year, reaching Rp145.31 billion.

Minister of Finance, Sri Mulyani, has emphasized that the performance of several tourism regions in Indonesia signifies a robust recovery from the adverse impacts of the Covid-19 pandemic. She stated, “The strong recovery can be observed in various regions, including Bali, NTT, and Yogyakarta, which have shown resilience despite the scarring effect caused by the pandemic.”

The positive momentum is further evident in the significant growth of entertainment tax revenues, which have surged by an impressive 81.8 percent year-on-year, amounting to Rp845.9 billion.

Furthermore, the restaurant tax revenues have also experienced a notable increase of 34.8 percent, totaling Rp6 trillion, while the parking tax revenues reached Rp588.07 billion, reflecting a remarkable rise of 37.9 percent year-on-year.