Skift Travel News Blog

Oyo, the India-based budget hotel chain and booking platform, plans to double its premium segment hotel count in Indonesia from around 200 properties to over 400 by the end of 2023.

Announcing its plans to double its portfolio, Oyo on Friday said the demand for premium accommodation options is expected to grow significantly in Indonesia in 2023.

The hospitality operator said it is targeting a mix of business and leisure destination such as Jabodebek, Java and Bali, Sumatra, Kalimantan, and Sulawesi.

Currently, Oyo offers accommodation in the mid-premium segment through Townhouse Oak, Townhouse, Collection O and Capital O.

Indonesia is one of the most mature markets for Oyo in terms of scale and unit economics, according to Ankit Tandon, global chief business officer and CEO, Southeast Asia and Middle East.

Indicating a steady rebound in business travel after pandemic induced travel restrictions ebbed in Indonesia, Tandon in his blog last month noted that Oyo has served 253 corporates in 2022 compared to only 75 corporates in 2021 recording a 237 percent year-on-year growth. 

Oyo said it has intensified its efforts to identify premium properties across all key regions and efforts are in full steam to onboard and equip them with latest technological tools, increase their visibility and in turn improve their revenue.

“We will identify premium properties and equip them with the latest tech tools to improve their revenue and visibility,” Founder and Group CEO Ritesh Agarwal said in a social media post.

In 2022, Indonesia saw around 633 million to 703 million domestic tourist trips while the tourism ministry said it is targeting up to 7.4 million international tourist arrivals and 1.2-1.4 billion domestic tourist movements in 2023.

“Our focus on expanding the premium hotel portfolios in line with the government’s plans to strengthen hotel industry to meet the requirements of the growing number of inbound and corporate tourists looking for well-priced mid-segment and premium hotels,” Tandon said.

A report by property consultancy firm JLL noted that green shoots are emerging for the hotel sector with occupancy levels expected to reach above 50 percent this year.

JLL also predicts an investment of $300 million in 2023 in this sector, which is the highest since 2013.

Oyo said it plans to play the role of a catalyst in this growth with a three-pronged strategy – maximising local market potential, technological innovation to address market pain points and strong collaboration with industry stakeholders.

Having entered Indonesia in 2018, Oyo has since recorded 15 times growth and its bookings from May-November 2022 rose 90 percent compared to same period in 2021. 

The hospitality tech company that looks to go public in the Indian stock market with its long-anticipated initial public offering (IPO), has set a deadline of mid-February to refile its draft red herring prospectus with the Indian stock market regulator.

Indonesia’s leading online travel agency Traveloka will be receiving a fresh round of funding of $300 million from Indonesia Investment Authority — the newly-formed sovereign wealth fund of Indonesia, investment management agency — BlackRock, Allianz Global Investors, Orion Capital Asia and other global financial institutions.

The financing round is said to have attracted significant interest from a number of long-term capital providers, resulting in an oversubscribed transaction, according to an Indonesia Investment Authority release on Thursday.

A Skift article in June had mentioned that the online travel unicorn had been looking to raise over $200 million, having already raised a total of $1.2 billion in funding across six rounds.

The financing would allow Traveloka an opportunity to further strengthen its balance sheet and enable the online travel company to continue to focus on its core business while also building for the future, Ferry Unardi, CEO and co-founder of Traveloka, said.

The pandemic has heightened the expectation for digital products, Shirley Lesmana, chief marketing officer of Traveloka, had said while speaking at the Skift Global Forum in New York last week.

With online travel agencies in Indonesia seeing their share of gross tourism booking increase from 24 percent pre-pandemic to 33 percent in 2021, the expectation is to reach 36 percent by 2024, said Ridha Wirakusumah, CEO of Indonesia Investment Authority.

With the pandemic having accelerated digital transformation, the financing would support Traveloka’s digital ecosystem growth in the travel sector while allowing the company to grow further, the release from Indonesia’s sovereign wealth fund stated.

“The financing aligns with Indonesia Investment Authority’s mission to create prosperity for Indonesia in the long term, by laying down the foundation for a sustainable digital ecosystem, including digital infrastructure, digital services and digital platforms — which will go a long way to drive economic recovery and growth,” Wirakusumah said.

Representatives from the financial institutions commended Traveloka’s resilience in navigating the Covid crisis and called the online travel company Indonesia’s national and regional champion and a key catalyst toward digitalization of travel and accommodation in the country and the region.

“Covid gave Southeast Asia a break from overtourism. Now what?” That’s the question The Washington Post asked on Saturday.

Pandemic-related lockdowns and reduced tourism let many destinations take a break from heavy volumes of visitors. But now, many destinations are divided. Some want to preserve the benefits of lower tourist impact, such as wildlife recovery. Others want to discard many restrictions because they’re eager to max out the job-creating potential of their tourist landmarks and attractions.

Here are a few examples:

• In Thailand, the ministry of natural resources and the environment has ordered the country’s 155 natural parks to shut down at least a month every year. The idea is to give nature a chance to heal from heavy visitor footfall and boat traffic. The decision came after the parks were closed for the first time in 2020.
• In Indonesia, officials recently tried to limit visits to the ancient Borobudur Temple in Yogyakarta to 15 at a time while also hiking prices for foreigners from $25 to $100 to pay for conservation. (The historic temple has nine stone tiers that support statues and relief panels of the Buddha.) Local opposition has since appeared, however, and the price hikes are now on pause.
• Indonesia’s effort to raise prices on a heritage site and national park featuring Komodo Dragons has also stalled, Nikkei reported.
• Before the pandemic, officials in the Philippines shuttered the island of Boracay for half a year and then reopened it with some restrictions. “But in April [of this year], Boracay exceeded its daily visitor cap multiple times,” the Post reported.

Overtourism is a term Skift came up with years before the pandemic. Overtourism continues to be a thorny challenge for the tourism industry during the recovery that Skift will continue to watch closely.

South East Asia and Middle East regions continue to dominate in the ranking of Muslim-friendly destinations, according to the latest research and rankings by Muslim travel consultancy Crescent Rating along with its partner Mastercard.

The report dives into how the under-40s global Muslim population is now driving the next phase of growth of what many in the industry call “halal tourism.” Gen Z and women travelers amongst the Muslim population will drive the growth from here on, according to the report.

From the report: “This year’s ranking reflects those efforts by the destination. Malaysia continues to maintain its top position in the GMTI 2022. However, the gap between Malaysia and other top Muslim-friendly destinations is narrowing.Indonesia, Saudi Arabia, and Turkey share second place. Uzbekistan has again shown significant improvement in the ranking, climbing 7 positions to be ranked no. 9 this year. Singapore is still the only non-OIC country to make it to the top 20 of the GMTI 2022 rankings.”

These four charts from the report are most instructive on the state of the market: