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When Supply Gets Top Heavy

Uncontrolled Hotel and Villa Construction in Bali to Fuel a Price War

(3/9/2012) The chairman of the Bali chapter of the Indonesian Hotel and Restaurant Association (PHRI-Bali), Tjokorda Oka Artha Arhana Sukawati, has admitted that price wars among Bali hotels are becoming increasing commonplace.

As reported by Radar Bali, the emerging rate war has been fueled by uncontrolled construction of new hotels. This worst overbuilding is taking place in areas already densely populated with hotels, adding even more pressure to sell at unsustainably low prices.

“The PHRI does not agree with the many new hotels popping up in Bali. These will only create a price war,” explained Tjokorda while speaking at a seminar with the theme of “Development without Control will Result in Price Wars” held on Tuesday, March 6, 2012.

Tjokorda, who is also the regent of the Gianyar regency of Bali, is hoping that all the stakeholders will unite and understand the dangers of the coming rate wars. He went on to warn that unless the government takes strong remedial action the unhealthy price wars will continue ad infinitum.

In addition to discussing the related risks of hotel rate wars, the seminar also discussed the problems brought to Bali tourism by the large number of illegal villas and unlicensed tour guides operating on the island. [See: See Villas of Villainy]  

The Bali Villa Association
only has 73 licensed, legal villas in Bali against an estimated  thousands of unregistered illegally operating villas.

The Governor, who also attended the seminar, complained that weak law enforcement is the major cause of poor regulation of new hotel projects. While steps have been made to limit the number of new hotels in Bali, the governor’s letters urging a moratorium on new hotel projects sent to regents have largely been ignored.

Clearly unhappy with the situation, Pastika said: “The competition is not only tight, it is also vicious. Whoever has much money, he will win. This has happened because we have made money a god. We must unite. But when we unite lets do more than just talk. There must be clear action."

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[The War of the Melati]