Bali hotel occupancy down

[balinews]

Hotel rates continued to increase in Bali despite a growing imbalance between supply and demand. But the good times are almost certainly coming to an end with increasing evidence that 2013 will finish soft for hoteliers, according to the latest Bali Hotel Update from C9 Hotelworks and Horwath HTL.

"With a massive increase in supply there are going to be gong to be both occupancy and rate pressures in Bali over the coming years," the reports says.

"Market wide, Bali hotels have shown consistently great rate growth, 8% annually on average between 2008 and 2012.

But occupancy "has fluctuated, struggling with the high amounts of new hotels opening on the island.

Occupancy fell below 70% for the year to June 30 – down 4% – while average daily rate increased USD5 for the same period to just above USD150.

Combined this has driven Revenue Per Available Room down USD3.

"It is expected that this negative trend will continue to the end of 2013."

Bali's Room Rates Holding But For How Long? | Travel Trends

 

[gilbert de jong]

First I had a 100 rooms with a 73% occupancy, now I have 150 rooms with a 69% occupancy....
I don't see a negative trend for the hotel owner...

 

[balibule]

First I had a 100 rooms with a 73% occupancy, now I have 150 rooms with a 69% occupancy....
I don't see a negative trend for the hotel owner...

I don't believe that makes sense Gilbert. You have higher costs with a 150 room hotel. Room rates are dropping as well.

 

[Markit]

If, for instance, you are getting $10/room for 100 rooms = $1000.

If you are getting $9/room (10% drop) for 150 rooms = $1350 (35% increase in revenues)

Your costs - personnel, electric, water, etc will tend not to increase by %35 leaving you, after building amortization, a nice little earner as Gil says.

 

[Dunaden]

If, for instance, you are getting $10/room for 100 rooms = $1000.

If you are getting $9/room (10% drop) for 150 rooms = $1350 (35% increase in revenues)

Your costs - personnel, electric, water, etc will tend not to increase by %35 leaving you, after building amortization, a nice little earner as Gil says.[/
This clearly is a place to learn about Bali and not business. The key word in your comment Markit is "tend".....I dare say if the number of rooms you have increase by 50% your cleaning ,insurance, maintenance etc etc WILL go up by 35%.....
Anyway....if that article is right and it sounded like a weird source...things are quietening down...who cares!!

 

[ferdie]

With the net profit diminishing and the acquisition and construction cost rising high, I would think the investors would have to wait longer for the return of their investment, this is based on the assumption the investor are looking for better investment and not doing money laundry in Bali:icon_e_geek:

 

[hinakos]

the hotel industry is a no brainer.
hire people when business is good.
fire them and lock the rooms up when it takes a dip.
average hotel staff can clean 25 rooms a day on a wage of 1.4 mill a month.
concrete prisons 4m x 5m (that's being generous), stacked 4 flors high and 50 rooms to a floor, charged out @ 700,000rp a night.....
easy peezy lemon squeezy.
cheap 1 week toursits eager to pay , banjar gets coin, jkt central govt gets tax coin, hotel owner gets coin, coffers get filled, governer laments development to the media for effect but it balances his books (and then a little something something) .......everyone is happy.

 

[davita]

With the net profit diminishing and the acquisition and construction cost rising high, I would think the investors would have to wait longer for the return of their investment, this is based on the assumption the investor are looking for better investment and not doing money laundry in Bali:icon_e_geek:

I suspect ferdie's last bit was close to reality.

I heard, when Putin's entourage came to Bali for Apec, the first thing they did was go on a coach tour to see what crummy boutique hotels their ill-gotten rubles had been laundered to buy.

 

[balibule]

If, for instance, you are getting $10/room for 100 rooms = $1000.

If you are getting $9/room (10% drop) for 150 rooms = $1350 (35% increase in revenues)

Your costs - personnel, electric, water, etc will tend not to increase by %35 leaving you, after building amortization, a nice little earner as Gil says.

You forgot occupancy.

The trick is to focus on quality and not quantity. Add value that doesn't cost much and charge higher. Or as the article says;

"It is important now (that hoteliers) remain strong on rates and tailor new supply to fill market gaps rather than using a scatter gun approach to development."

 

[gilbert de jong]

:hopelessness: ....

it's so easy..
occupancy down by 4%, but daily rate per room gone up $5.... the increase of available rooms downs the revenue per available $3.....

Either one sees it, or one doesn't

 

[balibule]

:hopelessness: ....

it's so easy..
occupancy down by 4%, but daily rate per room gone up $5.... the increase of available rooms downs the revenue per available $3.....

Either one sees it, or one doesn't

I can count four 100+ room hotels in a 1km radius from me and another 5 being built. The article that we are discussing says;

"With a massive increase in supply there are going to be both occupancy and rate pressures in Bali over the coming years," the reports says.

And I agree with that.

 

[balibule]

Another report in January 2013 says;

... mid-range properties charging rates between US$60 and US$219 are vulnerable.
"Occupancy for rate B and C hotels is already declining due to increased supply," says the report.
"Bali hoteliers learned from the difficult times between 2002 and 2007 and most hotels are looking to build their rates instead of occupancy."
Meanwhile, "hoteliers in Bali are asking the government to limit supply.
"They are concerned about an over-supply of hotel rooms on the island, as well as the drain on already stressed infrastructure."

Bali Hotels To "Defy Gravity" as Over-Supply Looms | Travel Trends