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Too Many Rooms, Not Enough Guests

Unregulated Increase in Accommodation in Bali Fueling Price War and Causing Local Hotel Closures

(1/5/2014) Bisnis Bali reports that the unprecedented increase in accommodation is outpacing demand created by an increasing number of island visitors.

As a result, price competition has become intense with simpler, traditional accommodation providers being overwhelmed by their professionally managed competitors. Locally owned hotels, unable to meet costs with declining revenues, are beginning to close their businesses.

Bali arrivals for 2013 will end the year at more than 3.2 million – a record number of foreign visitors to the Island. 



And, despite a 13.55% increase in foreign arrivals through the end of November 2013, occupancy rates at starred hotels decreased from a number of more than 60% in 2012 to only 55.82% in 2013.

The drop in occupancy is fueled by largely uncontrolled growth in accommodation for rent in Bali. Accommodation data published by the Provincial Tourism Office (Diparda) claims a mere 1.3% increase in starred, non-starred and home stay rooms between 2010 and 2012.
The Diparda figures count only 26,025 rooms in 2012.

The “official” figures, however, are generally seen as an unreliable reflection of the number of rooms being offered on the market, with a 20% increase over the same two-year period viewed as a truer reflection of the accommodation situation.

There are other tourism observers who put the number of rooms available on the market in Bali at 85,000.

The vice-chairman of the Indonesia Tourism Association for Bali (GIPI-Bali), Bagus Sudibya, said the number of new rooms on the accommodation market in Bali is a source of concern. Reflecting o the unregulated growth in rooms, Sudibya said, “I am worried there will be a tariff war that will result in the destruction of local tourism elements.”

He went on to say that there are many local hotels that have been forced to close.

Meanwhile, the vice chairman of the Bali chapter of the Indonesian Hotel and Restaurant Association (PHRI-Bali), IGN Rai Suryawijaya, also complained that new rooms coming on line was outpacing growth in tourism arrivals. This has resulted in a price war that will in the end hurt Bali tourism and the government.