Changing market dynamics, performance & demand trends in Bali & Indonesia

Changing market dynamics, performance & demand trends in Bali & Indonesia presented to International Hotel General Manager Conference & Exhibition 2017 Bali, Indonesia 21 September 2017

Horwath HTL: Internationally Horwath HTL is the world s largest hospitality consulting network, with 50 offices in 39 countries across the globe. Horwath HTL is a member of Crowe Horwath International, a professional association of accounting and management consulting firms ranked among the top ten international professional service groups. Our services cover all phases of the hotel property lifecycle for clients ranging from individually held businesses to the world s most prominent hotel companies, developers, lenders, investors and industrial corporations.

Horwath HTL: Regionally Horwath HTL Asia Pacific established in HKG in 1987, Jakarta office in 1998 100% focus on advisory services for hotels, tourism and leisure 11 key offices across the region: HKG, Shanghai, Beijing, Tokyo, Kuala Lumpur, Jakarta, Singapore, Mumbai, Sydney, Auckland and Bangkok In Indonesia our focus is on pre-development feasibility, redevelopment/renovation plans, valuations, management company negotiations, portfolio development & strategy

Outline: Changing market dynamics, performance & demand trends in Bali & Indonesia 1. HOTEL PERFORMANCE Asia Pac & ASEAN Highlights Indonesia Highlights 2. 10 TOURISM MEGA TRENDS 5 x demand side 5 x supply side

10 Mega Trends Demand 1. Grey brigade 2. Generation Y & Z 3. Growing middle class 4. Emerging destinations 5. Political issues and terrorism Supply 6. Technological (r)evolution 7. Digital channels 8. Redefining Loyalty 9. Healthy lifestyle 10. Sustainability Source: Horwath HTL

#1: Grey brigade! The share of world population over the age of 60 years: 8% 12% 21% 1950 2014 2050 Source: Horwath HTL

#1: Grey brigade! 79 m 20% 135 m 27% 68 m 11% 172 m 16% 196 m 25% 173 m 23% 62 m 6% 223 m 34% 212 m 9% 566 m 52% 487 m 11% 1,239 m 24% 250m 23% 33 m 3% Sources: Outbound tourist data: World Tourism Organization (2014). World Tourism Highlights. Global aging population data: HelpAge International (2014). Global Age Watch Index at a Glance. 16

#1: Grey brigade! More disposable income Less home responsibilities More time to travel Tailor-made services Face-to-face interaction Experience-driven travel products Seek security and safety Source: Horwath HTL, 2015 17

#1: Grey brigade! Health and Wellness Educational Tourism Slow Travel on Train / Cruise Genealogical Tourism Volunteer Tourism MultiGenerational Travel Mystery Travel Bucket List Travel Source: http://www.seniorlivingmag.com/travel Feel Young Soft Adventure

Opportunities? Demand 1. Grey brigade 2. Generation Y & Z 3. Growing middle class 4. Emerging destinations 5. Political issues and terrorism Supply 6. Technological (r)evolution 7. Digital channels 8. Redefining Loyalty 9. Healthy lifestyle 10. Sustainability Source: Horwath HTL

#2: Generation Y and Z Gen Y Born 1978-1994, aged 21 35 years Seek: exploration, interaction and emotion Technology is an integral part of their life Highly socially oriented High brand awareness, low brand loyalty Social media and ICT consumers 1/3 members of Gen Y are university educated Source: Nielsen 2014, Horwath HTL

#2: Generation Y and Z Gen Z (igen) 85% of Gen Z in the US own a smartphone Spending parents money as fast as they can Extremely high involvement in digital trends - digital integrators 17 jobs in a lifetime 15 places of residence in a lifetime Accelerated language adoption 1/2 of Gen Z are university educated Source: Nielsen 2014, Horwath HTL

#3: Growing Middle-Class Middle-Class Population in the BILLIONS! 2009 2020 2030 Source: Horwath HTL

#3: Growing Middle-Class Europe Asia -Pacific North America 2009 36% 28% 18% 2020 22% 54% 10% 2030 14% 66% 7% +/- -22% +38% -11% By 2030, Asia-Pacific will represent 2/3 of the total global middle-class population contributing 59% of all middle-class consumption. Source: Horwath HTL

#3: Growing Middle-Class Specific needs and wants Internet usage Independence English speaking Search for better deals English learning Investment in education Value for money Budget transportation Source: Horwath HTL

#4: Emerging Destinations Search for value Search for niche products Search for new experiences Source: Zephoriaa.com, google.com, http://newsroom.mastercard.com/press-releases/londonretains-crown-in-2015-mastercard-global-destinations-cities-index/

#4: Emerging Destinations Emerging Asian Cities, CAGR (2009 2015) Global top 20 destination cities: 10 cities from Middle East and Asia Taipei Tokyo 14,9% 14,6% Among those cities half of them experienced double digit growth Bangkok 11,7% Seoul 11,4% Istanbul 10,1% Source: Zephoriaa.com, google.com

#5: Political Issues & Terrorism Flow of migrants Terrorist attacks Transportation attacked

#6: Technological (r)evolution Source: Travel media group

#7: Digital Channels One cell phone per person By 2017, mobile = 30% of online travel value 60% Internet time = social networks 28% of people using them 65% of searches begin on mobile phones computers Social networking #1 mobile app activity Meta-search increasingly importance & entering booking game Time spent on mobile devices > time spent watching TV The internet and smartphones led to shared economy Source: Leonardo.com: Flurry; Ground Truth; BI Intelligence- The Future of Mobile; Exact target.com, Google Traveler research studies 2013, Euromonitor, Pocuswright

#8: Redefining Loyalty OLD PURCHASE COLLECTING POINTS REWARD NEW Check in, out of rush hour, is rewarded by special welcome amenities Using hotel facilities is rewarded by adventurous tours Writing online review is rewarded by discounts on hotel room booking Source: McCrindle research, UNWTO; www.hotelchatter.com; www.usatoday.com

Source: Horwath HTL #9: Healthy Lifestyles

#10: Sustainability

10. Sustainability #10: Sustainability Governments MACRO Destinations MICRO Transport sector Accommodation sector Local communities Other service providers Tourists Source: McCrindle research HBR, Towards the Business Case for Sustainable Hotels in Asia UNWTO; http://www.4hoteliers.com/features/article/8827?awsb_c=rss&awsb_k=xfeed ; Shangri La

Thank you! Matt Gebbie Director, Pacific Asia Citylofts Sudirman # 2203, 121 Jl. Mas Mansyur Jakarta 10220 Indonesia Ofc: +62 21 2555 8584 mgebbie@horwathhtl.com www.horwathhtl.asia/ www.horwathhtl.com