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No Need for More Hotel Projects in Bali

GIPI Says Too Many Hotel Rooms are Reducing Tax Revenues and Fueling a Price War in Bali

(11/9/2012) The Bali Chapter of the Indonesian Association of Tourism (GIPI-Bali) believe that the island has more than enough hotel rooms and, for that reason, needs no new hotel projects.

GIPI-Bali chairman, Ida Bagus Ngurah Wijaya told Bisnis Bali, “What we must do in increase the selling price of a room, not add more rooms by building new hotels.

Wijaya said his view is in keeping with projections made by property consultants Knight Frank that by 2014 Bali will have a total of 10,466 rooms, including 60 projects now under construction in Bali. The GIPI chairman explained that by selling rooms at a higher price the tax revenues from the Hotel and Restaurant tax would increase, enhancing the tax collected by the each region.

Wijaya said consideration must be given to stop granting permits for new hotels, especially in areas that are already filled with hotels and the surrounding natural environment is under strain.

Wijaya, who is also a hotel owner, bemoaned that the excessive supply of hotel rooms in Bali causes many hotels to have very occupancy levels during low season. This, in turn, results in an unhealthy price war among hotels fighting for business.

Meanwhile, the executive director of the Bali Hotels Association (BHA), Djinaldi Gosana, discounted the grim projections contained in the Knight Frank report, saying that the coming drop in prices need not necessarily become a reality.

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