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Inns of Quantity In, Inns of Quality Out

Academic Warns: Unbridled Accommodation Growth Has Turned Bali into a Low Quality, Cheap Destination

(3/2/2014) Bali Daily (The Jakarta Post) quotes tourism expert and academician Agung Suryawan Wiranatha, chairman of the Consortium of Tourism Research Group, expressing his concerns over tourism development in Bali and his fear that the Island was “not a quality holiday destination.”

Saying that Bali has become a “cheap destination,” Suryawan blamed the oversupply of hotel rooms as causing a sudden decrease in occupancy rates and the resulting “price war” now underway.

Lower occupancies, lower rates, shortfall in targeted revenues and the seeming anomaly of lower tax revenues are all part and parcel of Bali’s current situation.

Strapped for cash, operators will soon find themselves financially unable to maintain and refurbish their hotels. 

“This situation will turn Bali into a very cheap destination, while the island slips farther away from achieving its goal of becoming a quality tourist destination,” Suryawan warned.

Based on his research, Suryawan projected that Bali could have achieved 100% occupancy rates over the past two years with a supply of 41,814 rooms in 2012 and 46,193 rooms in 2013.

Some current estimates of the number of saleable accommodation rooms in Bali place rh total near 100,000.

While it remains problematic to calculate the exact number of rooms being offered by hotels and villas at the moment in Bali, its clear that the Island is grossly oversupplied with occupancies at hotel averaging 62.22% in 2012 and only 55,52% in 2013.

Agung says a better balance needs to be maintain between room supply and tourism demands in order to avoid the current situation where many hotels were operating with average occupancies well below 60%.

A proposal was made to the government in 2011 to allow the Udayana University’s Center for Tourism and Culture Research to monitor accommodation supply. That proposal has not been dignified with a response from the Government.

Calling for an urgent survey to be undertaken of accommodation in Bali, Suryawan want to see severe legal penalties for those who violate licensing and permit laws.

Meanwhile, Tjokorda Raka Darmawan who heads the Badung Tourism Agency defended the regency’s readiness to issue new hotel licenses. He said calls by the Governor for a moratorium were not implemented by the regency, who preferred “to control and restructure.”

Darmawan claimed 

“We have been very selective in issuing licenses, by implementing certain requirements.”

80% of Badung’s tax revenues totaling Rp. 2.2 trillion (US$189 million) were derived from hotel and restaurant taxes in 2013.