, Indonesia

Hotel occupancy in Bali drops to less than 10% in Q2

Average daily rate is depressing at US$50.

Hotel performance in Bali dropped significantly in 2Q. According to Colliers, in April and May, hotel occupancy in Bali was recorded at less than 10%, and the ADR was below US$50, which is very depressing for Bali.

Colliers suggests new protocols should be implemented for tourist destinations and hotels, especially related to hygiene, cleanness and security. This would boost confidence in staying at hotels, although improvement in the business climate is of prime importance.

Landlords expecting new hotel completions are advised to put off their launching schedule this year, while those with operating hotels should squeeze operating costs in order to survive the pandemic.

Here’s more from Colliers:

SUPPLY
During 1Q and 2Q 2020, at least 170 hotels temporarily closed their operations. Two hotels were previously scheduled for completion in 2020, but it seems everything is behind schedule, thus there will be no new hotel project openings this year. We are closely monitoring construction progress because completion schedules might change based on conditions in the field.

PERFORMANCE

2020 is obviously a year in which the hotel market in Bali has languished as never before. Hotels have generally been in survival mode during the pandemic. The first quarter was characterised by squeezed operating costs, while in the second quarter, hoteliers continued to cut expenses and maximise revenue from sources such as F&B (selling food from the kitchen and providing delivery services).

Another way of making the best use of income sources has been the sale of room vouchers and offering long-stay packages. Travellers are encouraged to book rooms in advance at very competitive prices, and can stay up to a time set by the hotel. The main idea is for hotels to get cash to cover operational costs, while guests secure a room.

Hoteliers maintain communication through social media, which does not necessarily relate to promotional activities, but these can be in the form of sport and cooking activities, talk shows or any other activities to keep up awareness, even though the hotel might be temporarily closed. The rebound of the hotel industry will take some time, but based on the previous experience, hoteliers expect that the industry will recover in 6 to 12 months.

Over the next few months, we think the domestic market will be the backbone of the tourism industry in Bali, however it is a price-sensitive market, thus offering more accommodative trip packages may be the key to attracting more local tourists to Bali.
 

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