Bali Room Rates Hit The Skids

Over the past few days I have been in Bali and despite the sunshine many hoteliers are shedding tears over declining room rates.

Clearly the hardest hit is the bludgeoning budget and economy sector and smaller off-beach boutique properties.

Prior to arrival I scanned a number of popular OTA’s and was amazed at the rate offerings in the trendy Seminyak area at the entry point of the market where rooms in regionally branded offerings were often as low as USD18 and within the USD20-40 a night band, it was indeed a buyers delight.

From a hotel developer standpoint once you take out the OTA commission it’s hard to understand what is left on the table that could even come close to covering operating expenses much less cover bank loans.

Driving around, the signs of stress are evident as properties are re-branding or changing affiliations after shortly lived management agreements. Talking to hotel staff it’s not uncommon to hear of delayed salaries or cost cutting.

There is a defined market shift with China becoming an increasing influence on arrivals and that is worsening the rate drift. Does it sound familiar Phuket?

One of the growing issues in Bali though is the prominence of taxi mafias and it’s not uncommon to see signs in Canggu, Legian and Seminyak that say Uber, GrabTaxi and Go-Jek are not welcome.

Though from a travelers perspective metered taxis are plentiful and the welcome sign of the Bluebird chain is evident most places.

Bali and Phuket remain yin and yang but the quick urbanzing trend is startling, as is the overbuilding of budget, economy and midscale hotels that all appear to be cast in the same nondescript model. Same, same but no different in any significant way.

For now value-seekers in Bali certainly are getting bang for their buck and for hotel owners, the grail is now turning from a fading hope of holding rates to simply stabilizing cash flows.

Oversupply, followed by the changes in geographic sources of business are the real disruptors in 2016.