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Buoyantly Optimistic on Bali Tourism in 2020

Hotel Investment Strategies: Bali International Arrivals to Grow in 2020

As reported by Kompas.com, Ross Woods, the Founder and CEO of Hotel Investment Strategies LLC links the downturn in Mainland Chinese visitors to Bali to the trade war between the US Trump Administration and the People’s Republic of China, and the financial uncertainty created by Brexit – the U.K.’s decision to leave the European Union.

Hotel Investment Strategies is a global hotel investment advisory firm that assists investors and managers of hotels in financial and business planning to maximize value to their bottom line.

Woods says that Chinese visitors to Bali have declined by nearly 14% from 1.4 million in 2018 to some 1.17 million in 2019. This trend, according to the business analysis, will continue in 2020 that he projects will see Chinese arrivals decline a further 4.9% to 1.113 million.

The continuing uncertainty surrounding the Chinese inbound market to Indonesia is causing many tourism stakeholders to shift much of their attention to European markets. Woods says tourism arrivals from Europe, numbering some 1.48 million in 2019, increased 6.6% from 2018. Wood added that he hopes European visitors from Europe in 2020 will boom by 17% in 2020 reaching 1.7 million.

Since 1990, European visitors to Bali have grown at a compound annual rate (CAGR) of 9.7%, said Woods. While the Chinese market to Bali remains mired in uncertainty for 2020, international arrivals as a whole are expected to grow.

Woods explained that based on his short-term univariate predictions, he projects that the final results for 2019 will show an approximate 3% increase in overall arrivals in 2019 resulting in a total of 6.25 million foreign visitors. Using the same methodology, he projects that international arrivals to Bali will increase by 10.2% in 2020, achieving 6.9 international tourist arrivals.

He thinks Australia will remain the main market for Bali achieving (once the final figures are tallied) 1.2 Australian visitors in 2019, an increase of around 5.5% over 2018. Based on a CAGR of 10.7% since 2002, Woods looks for 1.3 million Australians to visit Bali in 2020, an increase of 9.6% over 2019.

Turning his attention to the hotel sector in Bali, Woods said hotels are achieving average occupancy rates exceeding 60% with the lowest average occupancy of 61.5% in 2014 and the highest average of 67.8% in 2018.

Based on hotel performance for the period January to October 2019, Woods calculates five-star hotels in Bali achieved an average occupancy of 56.1% for the whole of 2019. This is an average occupancy that is 8.8% less than in 2018.  For 2020, he predicts average occupancy for five-star hotels will increase to 60.5%.

For the period from 1990 to 2003 the average length of stay (ALOS) for five-star how in Bali was 4 nights. The ALOS for five-star hotels is declining, to 3.42 nights in 2014 and 3.05 nights in 2015. Wood predicts the ALOS for five-star hotels in 2019 will be 3.08 nights, increasing to 3.14 nights in 2020.

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