Call for Hotel and Villa Moratorium in Northeast Bali

(2/26/2011)

The regency of Karangasem is suffering from an over-supply of hotel rooms, causing an advisor to the Indonesian Hotel and Restaurant Association (PHRI), Nyoman Sadra, to call for a moratorium on new hotel construction in that region.

Quoted in Bali Post, Sadra said on February 22, 2011, that observations on the ground in Karangasem – such as Candidasa, Buitan and Tulamben – show that many hotels have gone bankrupt due to a lack of guests with cash flows, in some instances, insufficient to even pay electrical bills.

In 2007 there were 214 hotels providing 2,176 rooms in Karangasem. This increased to 236 hotels supplying 2,333 rooms in 2008. A year later in 2009, the total number of hotels increased again to 268 with 2,399 rooms. Sadra says the construction of new hotels needs to stop with attention being paid instead to maintaining the quality of the current hotels and improving the overall infrastructure, while at the same time preserving the quality of tourist attractions in that region. He decried the continual building of new hotels and villas without proper studies being undertaken beforehand.

Sadra, who is also a member of the Karangasem House of Representatives, pointed to the Bukit Mimba hotel project at Padang Bai, the construction of which has come to a halt, but only after causing destruction to the surrounding forest and natural environment. Sadra complains what was once useful land has now become an abandoned construction site.

Data maintained by the Karangasem government shows occupancy rates at that region's hotels as averaging between 21 and 27 percent. In this depressed situation new villas and hotels continue to open, with many private villas operating illegally on a commercial basis.

Another Karangasem lawmaker, Luh Purnamingsih, supports Sadra's stance. She said that in addition to a moratorium on new building, a thorough survey is needed to bring illegal villas into line, some of which are operating illegally as commercial time-shares.

Illegal Villas

Purnamingsih said the illegal villas are hurting licensed hotels who contribute to the tax revenues of Karangasem: "The boom in illegal villas is really causing losses to PHRI members and licensed hotels. Meanwhile, the regional government is obtaining no tax proceeds from these illegal villas."

The Assistant Regent of Karangasem says he doe not agree with the proposed moratorium. Made Sukerana claims a moratorium is unnecessary, pointing to some hotels in Kubu and Manggis that manage to maintain occupancy averages of 60%.

Sukerana did concede, however, that there is an urgent need to bring illegal villas into line. Moreover, he proposed that illegal villas when discovered should not be demolished that some other solution should be sought.