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Hotel and Condotels in Bali: A Buyers Market

Hotel and Condotel Market in Bali Becoming Increasingly Competitive

(1/15/2012) Bisnis Indonesia reports that competition in the hotel and condominium (condotel) sectors in Bali is expected to become more intense due to the thousands of new hotel rooms and condominiums entering the market in 2012-2013.

Hasan Pamudji, Senior Research Manager for Knight Frank Indonesia, said Bali will remain a popular tourist destination, buoyed by steady growth in the Indonesian economy as a whole.

Said Pamudji: “Total additional new rooms in 2011-2013 equal 4,362 rooms from 24 separate projects. Of that total 49% will be rooms in starred hotels.”

He said that Kuta the largest number of new rooms will be in Kuta with 1,207 rooms, dominated by budget-priced three-star hotels.

In Sanur, 881 new hotel rooms will be dominated by four-star properties. Meanwhile, five-star hotel rooms dominate the 351 new hotel rooms being introduced into the market in Legian.

Pamudji sees the large number of new hotel rooms in Bali as translating into heightened competition and an impetus among existing hotels to upgrade and renovate their properties.

“Competition will also be heightened because of new rooms coming on line in the condotel sector,” said Pamudji.

Condotel Sector

As regards growth within the condotel sector, Fakky Ismail Hidayat, Senior Associates at Knight Franks Indonesia, counted the new condotel units from semester II of 2011 through 2012 as coming to 1,755 units, spread across 12 projects.

Kuta will dominate the new Condotel units with 672 units with the highest “sold” level reported among competing projects at 62%.

In addition, pre-sale units will hit 36% with 82% of construction of these units to be completed in 2012.

“The condotel market will continue to grow because of the uniqueness of Bali as a destination. Other destinations commencing on the condotel business will grow at slower rates than Bali,” observed Fakky.

He also projects that condotel units located near the beach, shopping areas and restaurants operated by branded companies will record the highest sales figures.

According to Fakky, Kuta will become the center for these projects with escalating price competition between competing condotels to be expected.