In the ongoing debate about price competition and the increasing cost of a Bali holiday, the impact on the price continuum of shifting exchange rates is often not taken into account.
In examining the impact of foreign exchange shifts on the cost of vacationing in Bali, it is important to also keep in mind:
- For historical reasons and the fact that the Indonesian Rupiah is basically a “non-exportable” currency, hotels in Indonesia have always priced themselves in US$.
- Meanwhile, hotels, restaurants and attractions in Bali are almost always priced in Indonesian Rupiahs.
In calculating the cost of a Bali holiday and regardless of how payment is actually made (i.e. bank transfer, credit card or cash), foreign visitors will in effect purchase U.S. Dollars to pay for their accommodation and secure Rupiahs to cover the cost of the other Bali-based portions of their island stay.
If we haven’t lost you yet, here’s what all this might mean to tourist visitors from a few key source countries of Bali visitors:
- Australian Dollars: An Australian visiting Bali in August 2010 and, again, two years later would be spending 14.41% more in paying for a hotel room than was the case two years before. Meanwhile, on the plus side, an Australian tourist, paying for food, drinks and other items priced in Indonesian rupiahs saw 12.73% more buying power in August 2012 than was the case two years before.
- Euro: While the value of the U.S. Dollar against the Europe has been largely “even” over the past two years (+1.97%) - meaning the cost of a hotel outside the impact of any hotel price hike remains much the same. However, Euro earners spending Rupiahs during their Bali holiday are spending 6.43% more in Euros to buy Rupiahs in 2012 than they did two year before.
- Japanese Yen: Japanese travelers are paying 7.42% more in 2012 in their home currency for an US$-based Bali hotel room than they did two years ago. To their credit, however, Japanese travelers are getting 13.08% more Indonesian Rupiahs for their Yens in 2012 than they did in 2010.
- Great Britain Pound: The U.K. travelers, who remain one of the strong performers among European visitors to Bali, found the value of the Pound Sterling against the U.S. Dollar only 1.6% less in valuable in the two years from 2010 to 2012. But, when U.K. visitors spent Rupiahs, they got 9.24% more for their Pound Sterling in 2012 than they did in 2010.
- PRC Renminbi: Arrivals from the People’s Republic of China continue to surge despite finding their U.S.$ price hotel room in Bali costing 6.53% more in Renminbi (before any hotel price hike) to purchase the U.S. Dollars needed for room bills than they paid in 2010. But, when PRC visitors go shopping or dining in Rupiahs, they happily discover their buying power has increased 13.11% over the two years from 2010.
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