The value sales declines recorded in experiential luxury as the COVID-19 pandemic took hold over the course of 2020 were among the most severe seen across the entire Indonesian luxury goods industry. One of the main factors behind this very unfavourable performance was the government-mandated closure of all hotels, restaurants and leisure and entertainment facilities during the early stages of the COVID-19 pandemic.
One of the major casualties of the COVID-19 pandemic during 2020 was the global travel and tourism industry. Moreover, luxury travel was hit harder than Indonesia’s travel and tourism industry overall as the uncertain economic environment that flowed from the COVID-19 situation placed substantial pressure on discretionary spending, encouraging well-off local people to reduce their travel budgets and opt for less expensive options.
While leisure travel faced falling demand in Indonesia during 2020, the situation was even worse in business travel, a major mainstay of luxury accommodation and business class and first class travel. Indeed, international business travel ground to a halt as Indonesia’s borders were closed to foreign visitors and most commercial flights were grounded early on in the pandemic as key measures to control the spread of the COVID-19 virus.
Experiential luxury is expected to recover strongly during the forecast period, with the category expected to bounce back robustly due to many affluent consumers seeking to realise travel plans that were postponed amidst the chaos and pressures created by the COVID-19 pandemic during 2020. Nevertheless, the recovery of the category is expected to be delayed somewhat due to the lingering negative impacts of the COVID-19 situation on demand during 2021.
One key factor which could prove instrumental in the recovery of experiential luxury in Indonesia from the bleak operating environment that has emerged from the COVID-19 pandemic is a shift towards greater digitalisation. We have already seen many players in luxury travel and tourism make strong moves in this direction, specifically via the introduction of online bookings for luxury hotels and the offer of more immersive virtual reality experiences online as a way of enticing would-be travellers to various regions of Indonesia and even specific attractions.
The forecast period is expected see major changes in consumer behaviours due to the experiences gained from the COVID-19 situation during 2020. Among these changes are set to be consumers staying closer to home when travelling and this can be expected to benefit experiential luxury by focusing the attention and spending of affluent Indonesians on the options on offer within the country, rather than on outbound destinations such as Singapore, Japan and Thailand.
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Understand the latest market trends and future growth opportunities for the Experiential Luxury industry in Indonesia with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Experiential Luxury research and analysis database.
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