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Brand Bali levitates amid Asean uplift

Jan 18. 2013
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By The Nation

Famed resort to add 12,000 new hotel rooms; Australians main driver


Bali’s tourism market is defying gravity with a looming pipeline of more than 12,000 new hotel rooms, driven mainly by Australian tourists, domestic demand and more ahead of the Asean Economic Community.
According to a newly released report by Horwath HTL and C9 Hotelworks, from 23,000 hotel rooms in 2011, the supply is expected to spike to 34,000 in 2015 when the regional integration under the AEC takes shape. The market-wide occupancy rate edged close to 70 per cent with an overall average room rate of US$137 (Bt4,000) for the first half of 2012. 
“Australia continues to be one of the key drivers of demand,” said C9 Hotelworks managing director Bill Barnett, “but the market is seeing a defined shift to short- and medium-haul regional markets. China is playing a far larger part in the mix, while the traditional Japanese market has eroded. We expect rising volume from Malaysia to surpass that of Japan.” 
Bali is preparing to host the Asia-Pacific Economic Cooperation (Apec) Summit in October. A $200-million upgrade of the gateway airport will see capacity rise to 25 million passengers a year, with other key and much-needed infrastructure upgrades including a new toll road and an underpass on a key transport route. 
Weighing in on concerns of over-development, Horwath HTL director Rio Kondo said: “The strong performance of Bali hotels is likely to continue with the new airport and infrastructure improvements despite new supply. It is likely that the impressive new stable of strong international brands opening in the ramp-up to Apec will induce new demand into the destination.” 
The surging tourism market has dragged along Bali’s real-estate sector, which has moved into top gear with large listed Indonesian firms and wealthy individuals creating a land-buying frenzy on the southern part of the island.
New internationally branded hotels such as the Sheraton Bali Kuta Beach are expected to drive new demand to the island. 
One key benefactor that is highlighted in the report is a spike upwards in hotel-branded villa and condo-hotel offerings. 
Analysing the trend, Barnett pointed out: “Unlike Thailand’s established Phuket and Koh Samui resort real-estate offerings, Bali has been inundated by domestic demand. Both investment and end users primarily from Jakarta and Surabaya have been buying off plan units in the $80,000-$150,000 range. 
“It is apparent that the jolt which occurred during the global financial crisis in 2008 has significantly altered the tourism sector. Asia’s rising middle class, the explosive growth of low-cost airline carriers and the decline of legacy markets all point to an increasing dependence on mass tourism.
“Every Asian resort destination is facing a similar dilemma. Private-sector investment is outpacing public-sector infrastructure, and the cracks are showing. Like it or not, Bali’s evolving hotel market is set to evolve dramatically as we head towards the landmark AEC free-trade initiative in 2015.” 

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