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Bali Hotel Rate War Escalates

With the Notable Exception of Nusa Dua, Many Hotels in Bali are involved in Intense Price Competition

(12/20/2013) As Bali grows increasing fearful of an escalating price war among the Island’s hotels, rates among hotels within the Nusa Dua Complex (BTDC) are reported to be increasing.

Bisnis Bali said that despite declining occupancies, the average room rate among BTDC hotel hit US$152.94 per night.

Occupancies among BTDC hotels at Nusa Dua have fluctuated during 2013. By the end of September 2013 the average occupancy of the hotels within the complex stood at 67.7%. This compares to the 71.26% during the same period in 2012.

The same period in 2011 saw occupancies that averaged 74.43%. The highest achieved occupancy  was 78.63% achieved in 2008.

Despite the sliding occupancy rates at BTDC, the hotels within Nusa Dua are demonstrating performances that far excel those of other hotels in Bali where Island-wide the comparative occupancy measured 56%.

Tragically, hotels in many parts of Bali are increased in fierce price competition.

According to Bagus Sudibya, a director of the Indonesian Tourism Association in Bali (GIPI-Bali), speaking on Friday, December 21, 2013, said that many involved in Bali accommodation sector are ill equipped and confused on how to compete in the highly competitve accommodation sector. There is also the suspicion that some new hotel projects are merely fronts for money laundering.

Sudibya, who is the owner of the Bagus Discovery Travel Group, said that hotels that are professionally managed would survive. Such properties will be creative in developing their products and will stand on a firm financial base.

The GIPI official said well run hotels will not be lured into trying to compete with hotels built with corrupt proceeds and involved in money laundering, a situation he said is made worse by the lack of a regulatory authority dealing with unhealthy price competition.

Sudibya said that professionally operated hotels would not sacrifice quality for the sake of price competition. “The issue is not the price of a hotel room, but whether that price is viable with the level of service and guest satisfaction promised,” he warned.

An unregulated explosion in the number of hotel rooms on sale in Bali is causing occupancies to decline. Starred hotels across the Island year to date in Bali for 2013 average 56%, down from 60% in 2012. This declining occupancy contrasts with increasing number of visitors to Bali – expected to exceed 3.2 million foreigner tourists in 2013.

Sudibya, as the deputy-chairman of GIPI-Bali, said the drop in occupancies in Bali is hardly surprising given the excess supply against current demand for hotel rooms.

He also complained that the growing price competition was being fueled not only by the large increase in hotels but the uncontrolled construction of villas. This, he warned, in resulting in some hotels closing and cannibalism within the Bali hotel industry.