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Monday, January 16, 2017

Business is so bad, some hotels are stealing towels from their guests


A former client from my Canberra days is busy comparing his ROLEX with the ROLEXes worn by other guests at the posh five-star Mantra Sakala Resort & Beach Club at Nusa Dua in Bali. Not my kind of holiday but each to their own.

Anyway, with the whole family in tow, he's doing his level best to alleviate Bali's chronic oversupply of tourist accommodation. With an estimated 130,000 rooms for rent every night in Bali, hotel occupancy rates are often well below 50%.

Accurate data on the actual number of tourist accommodation rooms for sale in Bali is hard to come by, especially when illegal villas and unregistered hotel rooms are added to the equation. If, however, the number of 130,000 rooms is largely correct, this translates into 47,450,000 hotel room nights for sale in a single year.

Extrapolating further and assuming an average of 2 people per hotel room, Bali would need its current estimated 10 million domestic and international visitor to stay between 9-10 days each visit to achieve 100% occupancy.

But, in fact, the average length of stay for tourists visiting Bali is only 3.8 days resulting in an average of 25-30% occupancy across the board.

Despite this dismal reality, an estimated 25 new hotels opened in 2015 with a number of major hotels still under construction. Add to this controversial plans to build a major new hotel project on reclaimed land in Benoa Bay that, if completed, would add thousands of new rooms to the Island’s already overstocked accommodation inventory.

A lack of understanding on just how dire the oversupply of hotel rooms has become among Denpasar and Badung officials who sign the “lucrative” permits for new projects suggests that the worst is yet to come in the continuing decline of the Island’s once proud hotel sector.

Seems like the rumour I heard is true: that business is so bad that some of the hotels are stealing towels from their guests.