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Once Inn, Now Out

Family Hotels and Inns in Bali Capital of Denpasar Being Squeezed Out of the Accommodation Market

(10/28/2012) The once lucrative business of operating small family inns and home stays in Denpasar is in danger of becoming a part of Bali’s past, as many of the island’s losmens, Hotel Melati and Pondok Wisata are facing a non-sustainable economic future.

The backpackers, domestic tourists and traders who once filled these small hotels continue to come to Bali in record numbers but have forsaken these traditional forms of accommodation in favor of city hotels, furnished apartments and private residences available for rent on a monthly basis.

Occurring simultaneously with this downturn in business has been a burdensome increase in property taxes and a system of local taxation in which officials insists a “minimal” hotel occupancy tax rate apply, regardless of whether or not guests have occupied the small inns.

Quoted by Denpost, some small inn operators complain that it is not uncommon to go for a entire week without a new guest checking into their rooms that rent for as little as Rp. 100,000 per night (US$11).

In fact, the small hotels are finding it difficult to compete with the numerous City Hotels now operating in Bali’s Capital of Denpasar that offer air conditioned rooms with private en suite facilities, TVs and WiFi services at rates as low as Rp. 330,000 a night (US$34).

Local inn operators and other critics of the wave of City Hotels complain that Denpasar authorities too readily grant licenses to new hotels, ignoring rules existing regulations on setbacks, minimum room size, minimum number of parking spaces and green-coefficients of 40% from the total building area in thepermit process.

In response, Denpasar Tourism officials respond by saying the additional numbers of rooms are still needed to facilitate growing tourist arrivals and that the root cause of the empty small hotels and inns is the poor management of those businesses.

Putu Budiasa, the head of Denpasar’s Tourism office said: “Many of the ‘Melati’ hotels in Denpasar are managed under family business model and are not professional. This fact is surely influenced by the lack of synergy in the staffing and level of service they offer to their guests.”

In addition to failings of management, Budiasa also points to the declining physical state of many of these hotels and the lack of renovation. “If hotels are good, clean and neat then automatically their will exist a desire to use these properties, This is what is sometimes not acknowledged by the hotels’ owners,” cautioned Budiasa.

Budiasa told the press that Denpasar currently has 195 melati hotels, 34 pondok wisata and 28 starred hotels.

Budiasa said his office has received no reports of local hotels going bankrupt, saying his office provides training and guidance to small hotel owners to help them remain financially sustainable.