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The War of the Melati

Surge in Small Inns and Non-Starred Hotels in South Bali is Causing Tariff Wars and Non-Sustainable Pricing


Bali News: Bali, Indonesia, Bank Indonesia, Udayana university, hotel developments, Luarensi Yoan Destalinda, rate wars, melati hotels, over supply hotels, moratorium
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(2/23/2012)

Radar Bali reports that the development of new hotels in Bali is increasingly uncontrolled; a fact that seemingly does little to deter the appetite of investors for new projects. The unbridled growth in hotel rooms is not reserved to merely starred hotels, but also includes inns and “melati class” properties.

Based on research carried out by the Bali branch of Bank Indonesia, the Island’s southern regions of Denpasar, Badung and Gianyar are being overrun with melati properties.

Speaking on Tuesday, February 21, 2012, Luarensi Yoan Destalinda, a researcher from Bank Indonesia, said that the over-supply of inexpensive hotel rooms in South Bali has resulted in occupancy levels below 30% at non-starred hotels during low season and a “rate war” offering prices that are not economically sustainable.

In order to address this problem, the government is being urged to introduce a moratorium on melati-class hotels in the southern part of Bali. “The tariff war between melati hotel operators is crazy. So this does not continue it is recommended that a moratorium on the construction of new melati properties be introduced in the three southern regencies,” said Laurensia.

It is hope that the proposed moratorium will persuade investors to bring their projects to other less economically robust regions of Bali, such as the island’s east and north.

Further research carried out by Bank Indonesia in collaboration with Bali’s Udayana University showed that agriculture and farming remain major economic sectors in Bali.

Because of the steady decline of the agriculture sector in Bali, it is hoped that policymakers include steps to preserve and promote agriculture in their work.

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