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Oversupply of Hotel Rooms in Bali

The number of hotel rooms in Bali is severely oversupplied, far exceeding current demand from both domestic and international visitors and resulting in an ongoing price war that many tourism observers view as economically non-sustainable for sound hotel operations, as quoted from Bali Discovery.

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Bisnis.com reports that the secretary of the Bali chapter of the Indonesian Hotel and Restaurant Association (PHRI-Bali), Perry Markus, claims that a survey conducted in 2015 counted 130,000 rooms on the Island, with 98,000 of those rooms centralized in the Regency of Badung.

The PHRI-Bali room count is based on government data and an online survey of travel-related sites.

Based on this room count, PHRI-Bali extrapolates that Bali needs 92.5 million (sic) tourists every year to achieve 100% occupancy. Meanwhile, the Provincial Tourism Authority (Disparda) recorded only 11.15 million tourists in 2015.

Explaining further, Markus said: “With this many hotel rooms, to achieve a minimum occupancy of 50% with the calculation that every room is occupied by only one person per day, during a year we need 46.28 million tourists.”

The PHRI Secretary calculations may be flawed, however, as they apparently fail to factor in the number of rooms occupied by more than one person and the length of stay for tourists in Bali.

In any case, Markus continued his analysis, claiming that hotel occupancies are now declining and averaging only 30-40% per year. Because some hotels enjoy higher occupancies, this means other hotels have occupancy rates as low as 10%.

The current low occupancy rates of Bali Hotel has resulted in what PHRI-Bali officials term as “unhealthy competition” and is attracting low quality tourists to the Island.

To help overcome problems in Bali tourism, PHRI is urging the Government to improve roads and ports. The road infrastructure in Bali is facing capacity limitation as high season results in severe traffic congestion on many roadways in tourist areas.

Improvements are also sought at Bali’s Ngurah Rai Airport that desperately needs an additional runway.

Source: balidiscovery.com

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