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Bali Hotel Numbers Take A Dive

Category: Hotels, Posted:13 Feb 2015 | 13:56 pm

The late year Q4 movement, which saw international standard hotels registering a year-on-year market-wide decline, has moved into 2015.
Early numbers from STR Global on January Bali performance indicates a trend towards a -14% decrease in occupancy compared to the same month in 2014.
Rates remain stable but there remains a currency distortion given the island's propensity to quote rates in US Dollars. Over the past year the Indonesian Rupiah has depreciated against the Dollar, hence the rate data has an element of diversion.
I am currently in Bali and speaking to hotelier's two trends in early year trading are apparent.
Some of the larger branded properties have reported a significant amount of cancellations quoting Australian travel warnings over the last month, which have been featured in the media Down Under.
Secondly for the all sectors currency depreciation is an ongoing concern. In 2014 the Australian Dollar lost approximately 15% to the US Dollar. The decline has continued this year, and again given Bali hotels quote rates in US Dollars, the accommodation cost for Aussie travelers has risen in certain cases close to 20% over an extended period.
More worrisome though is the slowdown in the energy and mining industries, particularly in Western Australia. The impact of an economic slowdown is hitting Bali's most important international market and there is no end in sight.
That said actual international tourism arrivals from Australia to Bali remain on the upward trajectory though a lower average length of stay, the surge in new hotel developments entering supply and transiting visitors going to the Gili islands and Lombok which are diluting South Bali's direct demand.
A wild card event which could potentially further challenge the leading overseas market to Bali is the pending execution of two Australian nationals facing the death penalty in Indonesia. Facing fierce opposition in Australia, the media fallout and political response may negatively impact short-term tourism sentiment to the destination.
For hotel operators and owners the conundrum of currency volatility remains challenging but clearly the market practice in quoting rates in UD Dollars will come under fire.
Most Thailand hoteliers recall the outcome of the 1997 Asian Economic Crisis when the legacy practice of US Dollar rates was abandoned in a shift to Thai Baht.
While globally the early projections that lower oil prices may actually spur more travel is turning into a bad oman, given the potential damage to resource driven economies such as Russia and Australia.
Presently most Asian resort destinations are turning their eyes to China in hope of replacing declining geographic segments, yet the question remains how much short term volume can be driven and more importantly at what cost to average hotel rates?
Expect 2015 to remain volatile to external geopolitical and economic issues.

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