Bali visitor growth slows, but occupancy stays strong
2018 was a challenging year for Bali with a volcanic eruption, earthquakes in Lobok and travel warnings from China. After two years of double-digit growth in international arrivals, growth seems to be slowing.
According to a new report from Horwath HTL, international arrivals to Bali reached 6 million in 2018 and recorded year-over-year growth of only 6 percent compared to 16 percent in 2017 and 23 percent in 2016. The achieved number of foreign arrivals last year was around 7 percent short of the targeted 6.5 million. In June, the closure of the Ngurah Rai Airport due to volcanic ash caused some airlines to cancel flights, further hurting the inbound numbers.
While visitor growth slowed over the year, hotels in Bali recorded overall increases in both occupancy and average daily rate in 2018 compared to 2017. Occupancy and ADR in the luxury segment (primarily all-villa resorts with international brand affiliation) both grew over the year, although the upper-upscale segment reported a decline in occupancy, which Horwath credits to a push to increase ADR. Hotels in this segment grew ADR and revenue per available room 8 and 5 percent respectively.
Similar to the upper-upscale segment, upscale hotels took a small hit to occupancy in 2018, to the benefit of a 5 percent increase in ADR driving increased Indonesian Rupiah RevPAR. Due to depreciation in the Rupiah, RevPAR fell $1 or 2 percent.
The best-performing segment was midscale, where RevPAR in local currency was up 33 percent year-over-year. Occupancy for this segment also improved 4 percent.
Area by Area
Hotels across all locations in Bali maintained occupancy levels in 2018. The beach and resort areas of Kuta/Tuban and Legian/Seminyak recorded the highest occupancy levels and year-over-year growth, although this was at the expense of ADR. These two areas both saw declines in ADR of about 4 percent. All other areas in Bali grew ADR in 2018, with Jimbaran/Uluwatu registering the highest growth at 8 percent, despite its high ADR base of $250 in 2017.
RevPAR was up in all areas in 2018. With strong occupancy performance in occupancy and ADR, Jimbaran/Uluwatu led the market, recording the highest RevPAR of $184.
The recent growth has not gone unnoticed by developers, and the island is likely to get 7,000 rooms over the next five years, an 11 percent increase from its current inventory. About 80 percent of the new room stock will be midscale or upscale. The report notes that West Bali and South Bali are still “the hot spots” for new hotels. Because the Kuta/ Tuban and Legian/Seminyak areas already are crowded, developments seem to be moving to the Canggu and Tabanan areas in the northwest. New hotels in Jimbaran/Uluwatu—such as the Ibis Bali Pecatu and Novotel Resort Bali Jimbaran—most likely will draw back the area’s high ADR.
In East Bali, Nusa Penida, a relatively undeveloped island southeast of Bali, has become a popular tourist spot alongside Nusa Lembongan. These small islands are experiencing a surge in small hotel and villa developments to accommodate the increase in tourists.
Last month, Marriott International signed a deal to open the W Bali-Ubud. When it opens next year, the property will be the second W Hotel in Indonesia, joining the W Bali-Seminyak. The property is being developed in partnership with Indonesia’s Ruang Teknik Group. The hotel will have 100 guestrooms, including 10 villas.