CEO Message #60
“Shifting to the Front”
Realizing the Target of 10 Million Foreign Tourists in the First Semester of 2019
November 29, 2018, at the Korpri Day celebration event in Senayan, I met the President. At that time we sat together and he asked, how about the achievement of the target of foreign tourists next year. I answered, with a budget like now, which only meets 40% of needs, achieving around 18 million (or only 90% of the target), and even then by not working on strategic programs that generally have a long-term impact such as: branding, new innovations such as millennial tourism and others, and investment in human resources. If we want 20 million and we do strategic things, the budget must be increased to 10 trillion rupiahs.
It is need to know that after going through various discussions by looking at various cabinet priorities, the total Ministry of Tourism budget in 2019 which was approved was only 40% of the budget we requested above. Even the marketing budget is only about 25% of the need. With this limited amount of budget, there is no other choice, unless I run the “Shifting to the Front” (STTF) strategy. We will spend the budget in the first semester or we move forward. Now, if we can prove that we are successful, then I believe the President will provide an additional budget.
So we will accelerate the pace of program execution from January 2019. If you use the parable of the engine, then the machine we use in 2019 is no longer a family car engine but a racing car engine, which is the maximum acceleration. In seconds we immediately reach the top speed. 2019 is the final year, therefore we must finish it.
But before explaining the STTF strategy further, it is better if I briefly evaluate the achievements and what we have been through in 2018. There is an interesting story about our achievements this year. In July-August the achievements are encouraging, we have penetrated 1.5 million foreign tourists per month. However, with the several successive disasters of the Lombok Earthquake (end of July), the fall of the Lion Air plane (End of October), the outbreak of the “Zero Dollar Tour” in Bali (October), and the Palu Earthquake on September 27, 2018, the arrival of foreign tourists immediately dropped. The following months immediately destroyed. In September we have 1.3 million, October is down, and then November is down again. December will rise a little because it’s the holiday season.
The first one is Lombok Earthquake that impacts all regions in Indonesia. The earthquake occurred in Lombok, but its biggest influence was on Bali. Why? It is because Bali has a very large number of foreign tourists reaching 40%, so with the Palu earthquake the impact other regions of Indonesia as well. Second, the fall of the Lion Air plane effect is not small. There was a massive cancellation, reaching 50% or more, mainly flights from and to China, because Lion Air has many flights to China. Third, the problem due to the polemic of the “Zero Dollar Tour” also led to the decline of Chinese tourists to Bali.
It means that learning from 2018, the effect was not small. And service sectors such as tourism are very sensitive to disasters such as earthquakes, volcanic eruptions, terrorism issues, or aircraft crashes. In 2017, we experienced the exact same event, the eruption of Mount Agung in September 2017. Its influence on the decline of foreign tourists was very significant around one million foreign tourists and felt its impact until six months later.
In 2017 we should have reached the target of 15 million foreign tourists, but due to the eruption of Mount Agung we lost about 1 million foreign tourists. Travel advice from the Chinese government is very effective in reducing the arrival of Chinese tourists to Bali. Chinese tourists’ arrivals become zerp immediately because travel advice is considered a prohibition. Meanwhile, travel advice from the Australian government is only considered as a warning. Therefore the arrival of Australian tourists is still 80-90%, the decline is not drastic.
Marketing Achievements, Destinations and Institutions
Related to disasters, we could not manage accidents and noise. Alhamdulillah, for the three fields that we manage, namely: Marketing, Destinations, and Industry and Institutional development in 2018 is very positive.
In the field of Marketing, the superior programs that we have planned are going well according to plan. The Hot Deals program runs very well in the Riau Islands. As of November, we have sold around 500 thousand pax, which means that by the end of the year the target will be exceeded. The program is very effective, because of the 500 thousand pax we sell, it turns out that tourists move from weekends to 50% weekday, while there are also about 50% new ones. So in Riau Islands the impact is very positive, why is it easy in Riau Islands? It is because foreign tourists enter Batam only by ferry.
Since 75% of tourists visiting Indonesia use airlines, special support is needed to attract more airlines to fly to Indonesia. There are three things that are done, first, for the existing route, we will help the promotional budget from the Ministry of Tourism, with the condition that inbound tourists go up. If airlines grow, tourism will definitely grow. Second, for new strategic routes, we help promote in the form of join promotion. Third, we challenge airlines to bring group tours from abroad to Indonesia with incentives. But on condition, this tour group should not be taken to Bali, but to Beyond Bali, aka 10 New Bali.
This year is a historic year for Indonesian tourism because we are starting to implement Competing Destination Modeling (CDM). CDM allows us to retrieve traveler data from various online sources, profile and segment it, and then target these travelers with customized and targeted advertising campaigns. So with CDM we can offer diving spots in Raja Ampat, for example, to the right traveler, at the right price, at the right time, at the right place.
So if a Chinese tourist searches for diving spots on Ctrip, for example, then when he goes to another site, for example a news site, a pop-up promotion that suddenly offers diving spots on Raja Ampat will suddenly appear. So it’s really proven that the more digital, the more personal.
As for destinations, it is well known that we have developed 10 leading destinations, which we then focus again into 4 super priority destinations, namely Lake Toba, Borobudur, Mandalika, and Labuan Bajo. What are we going to achieve in 2019? Basic infrastructure and utilities from the 4 priority super destinations have been met. For example, Lake Toba already has a toll road from Kuala Namu to Tebing Tinggi. The outer ring road at Samosir and four pairs of docks are complete. Likewise, the airport in Kulon Progo will be finished. The infrastructure in Mandalika is already good, even the investment has reached 2 billion dollars. Then, we hope that the airport in Labuan Bajo can become international airport.
In addition to the development of the new Bali, we have also pioneered the destinations that we direct for millennial travelers, namely digital destinations that are instagramable and nomadic destinations. For the latter, we have pioneered the nomadic destination of Orchid Forest in Cikole, Bandung and Eco Beach Tent at Tanjung Kelayang Beach, Belitung.
Then for the Industrial and Institutional fields we have developed the State Tourism College with the 3C concept: Curricullum, Certification, and Center of Excellence. In 2019 we must have an international class. The instructors must also be from international classes, practitioners must enter the campus. One of the certification is student certification.
In addition, for 2019 in particular we also prepare the ultimate weapon.
To realize the target of 20 million foreign tourists who are divided into three, namely: Ordinary, Extra Ordinary, and Super Extra Ordinary.
First, Ordinary are programs that we have successfully run in previous years, namely Branding, Advertising, Selling (BAS). Second, Extra Ordinary is a new program that we launched this year, namely Incentive (Airlines), Hot Deals, and Competing Destination Model (all three abbreviated: IHC). It’s called Extra Ordinary because these programs use breakthrough and innovative new ways. Third, Super Extra Ordinary are special programs that we deliberately keep to become the ultimate weapons, namely: Border Tourism, utilizing regional hubs such as Singapore and Kuala Lumpur, and Low Cost Terminal (all three abbreviated: BHL).
After evaluating the achievements in 2018, now is the time for me to explain the Shifting to the Front (STTF) strategy or the “Slide Forward” strategy. In the corporate world, doing STTF strategies is common. The aim is to secure the achievement of the target by making it all out to realize the target at the beginning of the year (usually in the first semester) so that efforts at the end of the year become lighter.
My experience in the telecommunications industry for example, if our customers get earlier, then he will produce more. So when it comes to telecommunications, the 1 million customers we get in January are different in value from the 1 million customers we got in December. But in tourism, it is not really right like that, because tourists come and go.
So through this STTF strategy we will use up our entire budget for a year in semester 1. The goal is clear to bring in 10 million foreign tourists at the end of semester 1, which is half of the year’s target of 20 million foreign tourists. Why do I dare to spend the entire budget in semester 1? It’s because I believe, if we are able to prove we can achieve the target in semester 1, there will be an additional budget in semester 2 through the APBN-P.
The question is, is the target of 10 million foreign tourists in semester 1 easy? Absolutely not! It’s far more difficult than if we reach the target of 20 million over two semesters. Why? First from the market side, it’s because the pattern of arrivals of tourists is seasonal and in the first semester the tendency is low season, while many holidays occur at the end of the year. Both from the internal side, in this first semester usually like “the engine is not hot”. Many preparations must be made, especially the procurement of goods and services tenders. Before the tender was carried out practically the programs could not yet be rolled out.
Therefore there are three things that I want to emphasize regarding the execution of this STTF strategy, namely PBP: Program, Budget, and Procedure. I often say that in strategic management there are Strategic Situation Analysis (SSA), Strategy Formulation (SF), and Strategy Implementation (SI). Well, in the SI concept that I rarely mention, there is PBP. First of all the programs, the three ultimate programs; the two budgets are allocated like; the third procedure is how.
Well, the weakest in the tourism ministry is the procedure, for example the procurement procedure earlier. Our problem is in a slow procedure. At present, we are getting the right allocation of resources. Only one thing I have to check on every day is the procedure or process to be fast. Last year and this year we practically only worked in semester 2 because semester 1 we spent to tidy up the procurement procedures. This year I don’t want to be like that anymore.
I will go directly to make sure the procurement is complete in the beginning. It’s only one way, which is checking every day. Don’t give me good report, I don’t believe it anymore. If not, I will chase it to the last person. So I will continue to pursue the Budget Realization Daily Report (LHRA). There are three things that I pursued: Budget Commitment, Physical Realization, and Payment Realization. The first is the language of planning, the second is the language of execution, the third is the language of control. Once again I emphasize at the beginning of 2019 that this year is a tough and challenging year. The final year, therefore we must finish it all. We will spend the budget in semester 1. Therefore we have to change the engine from a family car to a sports car. And we must be optimistic that we can realize the target of 10 million foreign tourists in semester 1.
Dr. Ir. Arief Yahya, M.Sc.