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When the Hotel Boom Goes Bump

Editorial: Bali is Sinking in a Sea of Empty Hotel Rooms


Bali News: Bali, Indonesia, oversupply of hotel rooms, GIPI, hotel occupancies, moratorium
Click Image to Enlarge

(3/28/2016)

With an estimated 130,000 rooms for rent every night in Bali, many of which remain empty, it should be apparent to even the most casual observer that Bali is in a critical oversupply situation.

As reported by Bisnis Bali, further confirmation of Bali’s oversupply of tourist accommodation is also seen in occupancy rates well below 50%. Low occupancies and the open tariff war now underway is resulting in bottom line results viewed by industry experts as non-sustainable over the medium to long term.

The vice –chairman of the Indonesian Tourism Industry Association (GIPI), Bagus Sudibya, admits that accurate data on the actual number of tourist accommodation rooms for sale in Bali is hard to come by, especially when illegal villas and unregistered hotel rooms are added to the equation. If, however, Bali assumes the number of 130,000 room number is largely correct, this translates into 47,450,000 hotel room nights for sale in a single year.

Extrapolating further and assuming an average of 2 people per hotel room, Bali would need its current estimated 10 million domestic and international visitor to stay between 9-10 days each visit to achieve 100% occupancy.

But, in fact, the average length of stay for tourists visiting Bali is only 3.8 days resulting in an average of 25-30% occupancy across the board.

Despite the dismal reality reflected by these figures, Collier International estimate 25 new hotels opened in 2015 with a number of major hotels still under construction. Add to this, controversial plans to build a major new hotel project on reclaimed land in Benoa Bay that, if completed, would add thousands of new rooms to the Island’s alreay overstocked accommodation inventory.

Pleadings from Bali’s Chamber of Commerce (Kadin), professional hotel associations and Bali’s governor for a moratorium on new hotel projects are all falling on deaf ears on the Regency and municipal levels of government where new hotel licenses are issued.

Worrying signs of the practical results of this worsening situation are evident across Bali’s hotel sector. “Belt-tightening” becomes the order of the day; a large number of contract and expatriate employee contracts are not being extended; service charges paid to hotel workers are down by 66% or more when compared to just a few years ago; and hotel management contracts are being truncated by disgruntled hotel owners.

A lack of understanding on just how dire the oversupply of hotel rooms has become among Denpasar and Badung officials who sign the “lucrative” permits for new projects suggests that the worst is yet to come in the continuing decline of the Island’s once proud hotel sector.

Whether greed or incompetence drives the eagerness of Denpsar and Badung officials to grant new accommodation licenses, the disastrous results are much the same and increasingly self-evident.

Room Boon Without End

Room Boom Threatens Bali on Several Fronts

The More the Merrier?


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