The Invisible Force Shaping the Island’s Future
Indonesia’s Ministry of Tourism recently announced a push to reduce domestic airfare prices, a move that could significantly impact Bali’s tourism landscape. While Bali’s international tourism market is often the focus of attention, domestic tourism remains a largely invisible yet powerful force driving the island’s economy. In fact, domestic tourists outnumber international visitors, yet their presence often goes unnoticed by many foreign business owners.
As the Indonesian Government intensifies its efforts to reduce airfares, the resulting boost in domestic tourism will open up opportunities for foreign-owned businesses that may not have previously considered catering to this market. This article explores how lower airfares could reshape the tourism sector in Bali and why businesses should start paying more attention to domestic tourists.
Understanding the Numbers: International vs. Domestic Tourism
Bali is synonymous with international tourism, often viewed as a paradise destination for millions of travelers worldwide. In 2024, the island expects to welcome approximately 6 million international tourists, down from an initial target of 7 million. However, what often goes unreported is that Bali attracts nearly 10 million domestic tourists annually. These visitors typically stay at local accommodations, frequent domestic eateries, and engage in a wide range of tourism activities.
Despite the sheer volume of domestic visitors, their impact remains largely invisible to the many foreign business owners who focus on catering to international tourists. This creates a skewed perception of Bali’s tourism economy, where domestic visitors are viewed as secondary or insignificant. Yet, the numbers tell a different story: domestic tourists represent a critical market for Bali’s tourism economy, particularly in sectors such as local retail, transportation, and mid-tier accommodation.
The Impact of Reduced Airfares on Domestic Tourism
Indonesia’s domestic airfares have remained high post-COVID, creating barriers for many Indonesians who might otherwise visit Bali for vacations, family events, or business. The government’s ongoing efforts to lower these airfares will not only make it easier for Indonesians to travel but could also drastically increase the number of domestic tourists in Bali.
For businesses that have traditionally focused on foreign tourists, this presents an opportunity to broaden their target market. The domestic traveler has different preferences, such as prioritizing affordability over luxury, while still seeking high-quality experiences. For example, mid-tier hotels, local restaurants, and small retail shops could see increased traffic as domestic tourists look for affordable yet enjoyable experiences on the island.
Opportunities for Foreign-Owned Businesses: Connecting with Domestic Tourists
Many foreign-owned businesses in Bali primarily cater to international visitors, focusing on luxury products, high-end dining, and premium services. However, the changing landscape of domestic tourism, especially with reduced airfares, opens the door for these businesses to diversify their offerings.
Businesses should consider tailoring products and services that appeal to domestic travelers, who may prioritise experiences such as:
- Affordable luxury
Domestic tourists, particularly from the upper-middle class, are looking for value in high-quality but reasonably priced products and services.
- Local experiences
Domestic tourists are often more interested in cultural and authentic experiences, such as traditional Balinese ceremonies, local crafts, and community-driven events.
- Convenience
Services that cater to ease of travel and planning, such as package deals that include transport, accommodation, and activities, are appealing to this market.
The Rise of Indonesia’s Upper-Middle Class: A Growing Market for Domestic Tourism
As highlighted in our previous article on Indonesia’s growing upper-middle class, this demographic is expanding rapidly, with increasing disposable income and a desire for luxury experiences within Indonesia. Domestic tourism is becoming more attractive to these individuals, and the prospect of lower airfares makes Bali an even more appealing destination for short getaways, family vacations, and even business retreats.
Businesses that cater to this group stand to gain from their willingness to spend on premium experiences, provided they offer a balance of quality, convenience, and cultural relevance. For foreign-owned companies that have typically targeted international tourists, this emerging market presents an opportunity to reimagine their offerings and cater to a broader audience.
Domestic Tourism: The Invisible Yet Powerful Economic Driver
The truth is, domestic tourism is often overshadowed by the international market in Bali, yet it plays a critical role in sustaining the island’s economy. Domestic tourists may not spend as much per day as their international counterparts, but their sheer numbers, coupled with their continued patronage of local businesses, create a significant economic impact. As foreign-owned businesses look to expand and adapt in a post-COVID world, tapping into the domestic tourism market could be a strategic move for long-term success.
Bridging the Gap Between International and Domestic Tourism
The Indonesian Government’s initiative to lower airfare prices will have wide-reaching implications for Bali’s tourism industry. While international tourism remains vital, domestic tourism has proven to be a resilient and growing force, one that foreign businesses should no longer overlook. By understanding the needs and preferences of domestic travelers, businesses can create inclusive, diversified offerings that cater to both markets.
Bali’s tourism landscape is evolving, and with it comes new opportunities for those willing to adapt and expand their reach. At TraceWorthy, we are committed to helping businesses navigate this shift and align their strategies to meet the needs of both domestic and international tourists.
Whether you are looking to expand your business or start a new venture in Bali, we are here to guide you every step of the way. Reach out to us today to learn more about how you can tap into Bali’s growing domestic tourism market.
Book an appointment for a consultation with a TraceWorthy trusted advisor today.