Bali Hotels To "Defy Gravity" as Over-Supply Looms
24 January, 2013 by Martin Kelly | No comments
The booming Bali hotel market will "defy gravity" and absorb 12,000 new hotel rooms over the next four years without prices or occupancy collapsing, according to a new report by Horwath HTL and C9 Hotelworks.
"The strong performance of Bali hotels is likely to continue with the new airport and infrastructure improvements despite new supply," says Horwath HTL Director Rio Kondo.
He believes it is also "likely that that impressive stable of strong international brands opening in the ramp up to the APEC CEO summit (in Bali during October) will induce new demand."
However, the market mix is changing.
Bill Barnett from C9 Hotelworks says while Australian travellers continues to be a key demand driver, "the market is seeing a defined shift to short and medium-haul regional markets.
"China is playing a far larger part in the mix while the traditional Japanese market has eroded.
"We expect rising volume from Malaysia to surpass that of Japan."
Although the report is primarily optimistic, it says mid-range properties charging rates between US$60 and US$219 are vulnerable.
"Occupancy for rate B and C hotels is already declining due to increased supply," says the report.
"Bali hoteliers learned from the difficult times between 2002 and 2007 and most hotels are looking to build their rates instead of occupancy."
Meanwhile, "hoteliers in Bali are asking the government to limit supply.
"They are concerned about an over-supply of hotel rooms on the island, as well as the drain on already stressed infrastructure."
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