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News  14, Jun 2013

Discover the (not so) hidden gem of Southeast Asia

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Indonesia - BuruflyMinh Bui returns to Jakarta, capital of Indonesia to discuss the opportunities in managing a travel startup.

After his previous article on e-commerce in Indonesia, Minh Bui is back in Jakarta again to attend Web in Travel Indonesia. He discussed with some entrepreneurs from hot travel startups and VC firms as well as to conduct a round table discussion about travel in Indonesia from different perspectives. Guests include:

Ferry Unardi – Co-founder and managing director of Traveloka.com: A Harvard MBA drop-out, he started Traveloka.com, a travel meta search engine in Indonesia with two others in October 2012. They are all veterans from top tech companies in Silicon Valley. Now, Traveloka serves more than two million flight searches per month. 

Marshall Utoyo - Chairman and CEO at Asia Pacific Venture Partners: Marshall created an investment company at the age of 21 with colleagues from college. Asia Pacific Venture Partners is a Micro-VC that combines Silicon Valley know-how with a network across Asia-Pacific, based out of Singapore, that invests in technology startups in the region.

Peter Goldsworthy – Founder and CEO of Burufly: Peter Goldsworthy was the country manager for Admax Network from 2007 to 2011 for Indonesia and Malaysia. He launched Burufly because he was tired of people thinking Bali was the only place in Indonesia. Burufly is Indonesia’s first social travel site, with 400,000 registered members.

Let’s start with Q&A about destinations, travelers’ portrait, social media and mobile, and growth: trend of Indonesia in the next five years:

Destinations in Indonesia

1. Bali is very famous for travelers, so are there any other domestic destinations that can play a role of a key destination together with Bali? What are they?

Ferry: Based on our data, outside of Bali, the cities of Medan, Jogjakarta, Surabaya, and Padang are becoming great alternatives as they each offer a completely different experience for travelers.

Marshall: Lombok and Wakatobi, because both are exotic diving places, and luxury hotels start to ‘look’ into those lands.

Peter: The two hot prospects looking at the base data we have on “social engagement” are Lombok and Raja Ampat. Jakarta is famous for business travelers and is definitely heating up as the international business community have taken notice of Indonesia’s strong economy. Other spots like Belitung, Karimunjawa and other beautiful islands would be in everyone’s bucket list if they were a) easier to get to and b) marketed to the world better. If the government (local or national) can help with improving the infrastructure and subsidize the cost of getting there, Raja Ampat would be the #1 hot spot in Indonesia.

2. What are top three popular destinations for traveling abroad?

Ferry: Singapore, Kuala Lumpur, and Bangkok

Marshall: Singapore, Seoul, and Phuket

Peter: We don’t cover international yet, but it is pretty obvious that Singapore, Thailand and [the] Middle East (Mecca) are the most frequently talked about on social media.

Travelers’ portrait

1. The middle class people in Indonesia are growing up in recent years, so who are they?

Ferry:  A lot of Indonesians are traveling for the first time, thanks to the competitive rates that local airlines are now offering.

Marshall: They are the ones that recently graduated and land a job. They usually travel to Bali and to small islands near Java island.

2. Do Indonesian travelers like to book online? and what could make they feel more confident to book a site?

Ferry:  A lot of Indonesians are already booking their flights and hotels online. As there are more reliable services available for them to use, we should see an even more tremendous growth in online booking traction in the coming years.

Marshall: Yes, they book online, they’re confident when there’s a lot of other active user that gives suggestions, and/or give comments to the site. Plus the interface [helps].

Peter: Travel Agencies still are the big fish in the travel space. To make users feel more confident you have to make the entire experience more worthwhile, creating sustainable value (beyond savings) for consumers. That is why we are focusing on content first,  giving people the ability to make then get input from a community of experts.

3. How can they make a payment for online travel sites? And what are the estimated percentage of some popular online payment methods? 

Ferry: Although the majority is still using bank transfer, we can already observe a shift towards using credit card to complete their online travel transactions. In terms of the percentage, we’ve seen a roughly 60-30-10 split between bank transfers, credit cards, and other online payment methods.

Marshall: Credit cards 30 percent, wired transfers 25 percent and direct 45 percent (data is estimated).

Social media & Mobile

1. Indonesia is a very “social” country. What is the role of social media that makes the most impact to travelers’ decisions? How do we increase transactions from social media channels?

Ferry: That’s something that we are still working on today. We believe social media has a great potential in driving transactions but so far we haven’t cracked the code yet.

Marshall: They impacted a lot, a lot of people don’t know where to go even though they have the time and money to do it, and so by giving advice on where to go and how much to spend on social media, that’ll make them wanting to go to certain place. To increase it, simply channel it into a portal that connects those cravings into sets of trips.

Peter: It is about experimenting, seeing what messages (hard sell, soft sell, branding etc) work with your social audience.  Twitter is a longer term approach, whereas Facebook you can just hijack growth fast with ads and posting on other pages.  Our learnings so far is that twitter delivers a more genuine audience, how that translates to conversions is yet to be seen.

2. Mobile, specifically smartphone, is very popular in Indonesia. What is the role of mobile to your company strategy?

Ferry: We see smartphone as the way of the future for online travel-related transactions. However; as of today, the majority of mobile users in Indonesia are using feature phones, which are not as great for transactions. So, we’re definitely keeping an eye on how the mobile usages evolve over time.

Growth & Trend

1. What are the key factors to grow or to limit the growth of online travel industry in Indonesia?

Ferry: I’d say that key factor lies in the online travel players themselves. Some of the services that are available today are just not reliable enough for a lot of people to use and that might limit adoption. Also, payment is still somewhat an issue. As those sites are getting more reliable, and more people have access to credit cards and other online payment options, we should see a faster growth in online travel transactions.

Marshall: User interface (grow) and uncompetitive price (limit)

Peter: Quality of startups in travel space. If there a batch of bad ones, it could taint the industry.

2. Do you see any trend for Indonesia tourism next five years?

Ferry: Indonesian’s cities will become more connected than ever before as there are more flights connecting them, and as a result, we should see an explosion in domestic travel.

Marshall: It heads into more luxurious segment. Affordable luxury is the new backpack.

Peter: Bali will become saturated with hotels, prices will decrease (hopefully) of hotels and tourists will still flock there.  Both locals and inbound tourists will look beyond Bali, with sites like Yogyakarta, Lombok, Gili’s, Raja Ampat and some of the great dive sites becoming hot spots.

Image Credit: Bali Pura / Shutterstock

Minh Bui

Minh Bui

Minh Bui is a Founder Institute mentor, who visited all Southeast Asia countries, and has frequently traveled through the top 5 major countries Indonesia, Malaysia, Singapore, Thailand and Vietnam to explore Travel & eCommerce space in Southeast Asia. He've been experiencing founding three different startups (Travel, eCommerce, Mobile) and he've been working in different senior marketing executive roles in both corporates and startups focusing on Southeast Asia market.

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