Credit cards, confidence key to unlocking Indonesia’s online potential

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Minh Bui , a Founder Institute mentor, focusing on Southeast Asia online travel & ecommerce, was at WIT Indonesia and caught up with two speakers – Marc Steinmeyer, President Director/Founder of TAUZIA Hotel Management, and Graham Hills, Managing Director, Wego to get their insights into the market.

Q: Bali is the most known destination for travellers – do you see any other destinations coming up?

Hills: Jakarta plays an important role and the popularity of Jakarta is increasing year on year. It’s the main gateway into the country. Bandung and Yogyakarta are showing increased popularity with international tourists and both offer international airports with connectivity with Singapore and Malaysia.

Steinmeyer: The main gateway is Jakarta, for business and leisure. The second is Bali for leisure and MICE. Other areas in Java will complement these destinations – Yogyakarta, Bandung, Solo. For Asian tourists especially Malaysians, Bandung is a favourite while Europeans also visit Central Java and Sulawasi (Toraja).

Q: What are top 3 popular destinations for Indonesians travelling abroad?

Hills: 80% of international travel by Indonesians is to Asia, however Europe is the fastest mover with searches up 335% in 2012 compared to 2011. Overall we saw a 90% increase in searches for international destinations. Top 3 international destinations for Indonesians are: Singapore, Kuala Lumpur, Bangkok

Steinmeyer: Singapore and Malaysia (due to medical purposes as well…) then followed by Europe (historical background with the Dutch and other famous European destinations) and Australia.

Q: People talk of the rising middle class – who are they?

Hills: Roughly 62% of Wego Indonesia users are aged 25 to 44.  Around 50% of users earn more than USD $500 per month with a third of users earning more than USD $1,000 per month.

Steinmeyer: Indonesia has a population of around 250 million people and 60% of them are below 35 years old.Global management consulting firm the Boston Consulting Group is projecting the Indonesian middle class — which currently stands at 74 million — to reach 141 million people in 2020 (from The Jakarta Globe)

Indonesians have travelled extensively within Indonesia thanks to budget airlines’ growth. Their first reason is to visit relatives/families while the younger generation travel to discover their country.

Q: Do Indonesian travelers like to book online and what would make they feel more confident to book online.

Hills: Yes, Indonesians are booking online, but only a small % of Indonesians have credit cards – there are estimated to be less than 15 million credit cards in Indonesia. Interestingly the number of Indonesians with passports is reportedly even less. Sites that offer local payment options like bank transfer, ATM transfer and call centres are showing increased popularity in the market. Local contact phone numbers play an important role in increasing confidence. Offering content in the local language, Bahasa Indonesia, is also key in gaining trust and appealing to the local market.

Steinmeyer: More and more Indonesians are booking online, in larger cities it has been become a part of a lifestyle (hotels, airlines, online shopping). Our bookings online have doubled this year compared to last year.

Improved security of online transaction and better internet infrastructure will certainly help Indonesians feel more confident with online transaction.

Q: Let’s talk about payment on online sites – how is the problem being solved?

Hills: Refer to http://api.dailysocial.net/en/wp-content/uploads/2012/08/eCommerce-in-Indonesia.pdf

Steinmeyer: In the coming years, customers will shift to online travel from traditional travel agents since it offers better flexibility, especially in a traffic congested city like Jakarta. According to a survey from Veritrans, credit card usage is in the increase making online payment processes easier. The e-commerce market, the survey concluded would likely expand from around $1 billion to $10 billion by 2015 (The Report Indonesia 2013 – Oxford Business Group).

Here’s an interesting article in The Jakarta Post which gives an idea of how the travel industry will remain as the main engine of online payment growth in Indonesia.

Social media & Mobile

Q: Indonesia is a very social country. How does  social impact oo travellers’ decisions?

Hills: Social media plays an important role in building brand awareness for online travel companies in Indonesia. It’s also a channel that is helping educate the market on where to travel with social media strongly influencing destination choice.

Steinmeyer: Indonesia is one of the biggest social media users in the world, awareness of our hotel brands is important in social media. It is a way to interact and engage our customers and stakeholders as most Indonesians own smartphones and tablets thus social media accounts. Each of our hotel brands and our hotels have social media accounts. It is a current way to create brand loyalty and most importantly to receive feedback.

Q: Mobile, specifically smartphons, are very popular in Indonesia, so what is the role of mobile in your company strategy?

Hills: Mobile is very important in Indonesia. Wego will be releasing mobile apps later this year. We already have a mobile site m.wego.com.

Steinmeyer: We will launch our mobile applications soon as a way to reach and accommodate our guests. They could book their rooms from the comfort of their homes as well as when they are travelling.

Q:  What are the key factors to growth of the online travel industry in Indonesia?

Hills: Ease of payment. More local players. Local players with call centers will also play a role. Social media will be channel that continues to educate the market on where to travel and for brands represents a channel that can impact purchase decisions.

Not specific to online, these factors will also play a role:

• Ease of obtaining Visas for Indonesians will increase the destinations they are travelling too

• More connectivity from Indonesia and within Indonesia through airline route expansion will open up new markets outbound, inbound and domestic

Steinmeyer: Internet infrastructure (improvement of speed, access and connection of the internet), this will affect greatly the growth of online travel.

Q: What trends do you see in the next 5 years?

Hills: Indonesia is still in a shift from offline booking to online booking. Many Indonesians are also becoming first time travellers. In the next 5 years we expect to see more Indonesians travelling internationally and the travel budget for Indonesians increasing as the middle class emerges. Better air connectivity and cheaper airfares will lead to Indonesians travelling more frequently each year too.

Steinmeyer: Indonesia could be one of the principal tourist destinations of Asia. Its 17,500 islands represent an enormous potential with cultures, climates and sites that have so far remained undeveloped and off the tourist track. Sustainable development is a key. If it is not, the beauties that Indonesia possesses risk being destroyed within a short space of time.

Tourism is also a major job creator, it opens the country to the world and promotes mutual understanding between cultures. As a key industry, tourism facilitates technology transfers in numerous fields and calls on the skills of locals to provide the environment for its development.

Domestic travellers will grow if the infrastructure is well developed and new destinations will automatically be created such as Lombok, Sulawesi and Sumatra.

* This post was first appeared on WebinTravel.com

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EcomEye.com Southeast Asia eCommerce
Minz Buii is a digital marketer/market advisor from both startups and corporates in online ecommerce and offline retail chain in Southeast Asia. He's also an avid Asia explorer and love enjoying local foods and learning different cultures in Asia. Currently Minz is based in the melting pot of Bangkok!