0 Booming property hurts hospitality business

Tourism stakeholders have said the booming property business that has resulted in sprawling new accommodation facilities is hurting the island’s hospitality business. This shifting trend of business from hospitality to property has caused a fierce price competition among hotels, especially in peak seasons. “This shifting trend has worsened the hotel price war. Many property companies build new hotels, then they offer a cheap promotional tariff to attract tourists,” Ngurah Wijaya, chairman of the Indonesian Tourism Businesses Association in Bali, said recently. 

It happened because the administration was too lenient in issuing licenses to build new accommodation and failed to implement the moratorium issued by the governor, he said. “Now the focus is no longer on hospitality and service, but has shifted to price,” he said with regret. Furthermore, the booming property business had negatively affected the island’s spatial and environmental condition, he said. “The development of infrastructure also failed to cope with the sprawl of new accommodation sites, and overall hurt the image of Bali’s tourism.”

Tjokorda Artha Ardana Sukawati, chairman of the Association of Indonesian Hotels and Restaurants in Bali, shared similar views, saying that the new properties offering low rates had disadvantaged well-established accommodation facilities. He was of the opinion that the condition needed attention and should not be neglected in order to prevent further unhealthy business competition. “The association should have been given a role by the administration to control the development of new accommodation in Bali,” he said, as quoted by Antara news agency. 

Thriving tourism in Bali has encouraged investors to build new accommodation facilities, despite the oversupply of hotel rooms in the island’s most crowded areas. A recent piece of research conducted by property consultant Knight Frank (PT Willson Properti Advisindo) showed that Bali would have 10,466 new hotel rooms by 2014 from a total of 60 construction projects currently underway. According to the research, as many as 3,922 rooms, or 37 percent of the total new room supply, had come into operation starting the second half of this year. 

The supply of new rooms is dominated by four-star hotels, which accounted for 52.8 percent, followed by five-star and three-star hotels with 23.9 percent and 23.3 percent, respectively. Kuta is recorded as the place with the highest supply of new rooms, at 3,358 rooms, half of which were in four-star hotels. Nusa Dua will see 924 new rooms, 72.5 percent of which are in five-star hotels. New rooms in Seminyak, Sanur and Legian will be dominated by four-star hotels. There will be additional 691 rooms in Seminyak, 1,025 rooms in Sanur and 671 rooms in Legian. 

Jimbaran is also seen to be booming as more investors look to buy property along the area’s hills and cliffs with sea views. The improvements to infrastructure in Bali, including the expansion of Ngurah Rai International Airport, the Benoa-Nusa Dua toll road and the underpass, have positively affected investors’ confidence and have increased the property business targets. The research also showed that over the last few years, the property market in Bali had remained favorable for both local and international investors, in line with Indonesia’s economic growth. 

The increasing number of domestic and foreign tourists to Bali had boosted market optimism and driven prices to continuously increase. Bali is still considered a safe location for investment amid the uncertainty of the global economy. The research also found that the property market in Bali was mostly driven by demand from local investors, predominantly from Jakarta and Surabaya. As a result of this booming property business, the price of land in Bali continued to show an upward trend during the first semester of the year, with an average increase of 28 percent in a number of strategic locations.

source : bali daily