Bali Not Yet Affected By Rupiah Drop
In the year of all things disruptive, currency has once again entered the Asian equation as it did in the mid-Millennium and back in the 1990's.
Indonesia has seen a sharp depreciation of the Indonesian rupiah, highlighted last week when it hit IDR14,700 to the US dollar.
I checked with a number of hoteliers in Bali to see what was the impact on the market in terms of the short term.
One key fact is that Indonesian's remain the number one market for Bali and as such that has mitigated risk to a great extent.
Some hotels post room rates in US dollars hence average room rates and margins are on the rise.
That said a new law has come into effect which requires are products to be quoted in rupiah, hence foreign markets are reacting favorable to the currency bump in what is effectively lower rates.
On food and beverage, these typically are quoted in rupiah, hence static but suppliers are upping prices at the moment.
Bali's key overseas market of Australia is still seeing an impact from the depreciated Aussie dollar and this is being reflected in a lower average length of stay and less discretionary spending.
Overall business remains brisk but the biggest disruption to Bali's hotel market this year was the fallout from the volcanic ash during peak summer trading and not currency.
Longer-term the rupiah is expected to further deteriorate so stay tuned to see how this plays out.