Should hotel developers be responsible for Bali’s development planning and control? The profit motive inclines otherwise.
Investors planning to build hotels on Bali should take the island’s carrying capacity into account to prevent further degradation, especially in relation to the environment and local culture, according to former tourism and culture minister I Gede Ardika. He was speaking in front of key players and analysts from the accommodation investment sector during the opening of the Indonesia Hotel Investment Conference 2014 (IHIC 2014) held by the Bali Hotels Association on Friday.
Known for his passionate advocacy of people-based tourism, as well as cultural heritage preservation, Ardika questioned the development currently taking place in the tourism sector on the island.
During his keynote address, he said most investors on the island currently had yet to be an integrated part of the community and to make the most of local resources. Instead, they make local people feel marginalized amid the extensive tourism development, he claimed.
“This is our challenge. Tourism practitioners in Bali should rethink whether the current model of development will continue to be tolerated. And local people should be aware [of whether] they wish to let their island be ‘destroyed’ like this,” he said.
Bali is currently facing overdevelopment of various accommodation facilities and supporting infrastructure, resulting in increased land conversion and demand for food, water and electricity.
Ardika called on investors to be on the frontline in terms of preserving the island’s environment and culture, including implementing local values like Tri Hita Karana (harmony between humans, the environment and God), and abiding by regulations and the United Nation Word Tourism Organization (UNWTO) principles.
“Investors have to be integrated with the community [members], partnering with them, respecting each other and strengthening local identity. You are the ones on the front line of preserving the attractiveness of Bali,” he stressed.
He also expressed his concern that the oversupply of accommodation had forced hotels to decrease their room rates, thus making Indonesia the country with the lowest room rates in Southeast Asia.
Wiryanti Sukamdani, chairwoman of the Indonesian Hotel and Restaurant Association (PHRI) and the Indonesian Tourism Promotion Board, revealed data showing that 288 hotels were scheduled to be built in several major tourism areas across Indonesia by 2016.
“Of the total number, 67 hotels will be built in Bali. I have no idea where these 67 hotels will be built. We don’t have rice fields anymore. We have to preserve the natural landscape and the environment. When we build hotels, we need water, electricity, food […] This is a challenge for the tourism industry,” she said.
According to PHRI data, there has been a sharp increase in the number of hotel rooms in Bali. In 2011, there were 22,000 rooms. The number rose to 25,400 in the following year, and doubled to 50,100 rooms last year. This year, it is predicted that there will be around 55,200 rooms catering for tourists on the island.
In the first quarter of this year, investment in Indonesia’s tourism sector had reached US$130.13 million, comprising $117.27 million in foreign investment and the remainder in domestic investment. Eight percent of the total investment went to Bali.
“Indonesia remains interesting for investors, as it has the fourth largest population in the world with 245 million [people]; 53 percent are young generations, with growing consumption. This will also increase growth in the tourism sector,” she said.
She also revealed data on the average occupancy rate for hotels in Indonesia, which she considered “not very interesting for investors”. For four and five star hotels, the occupancy rate stood at 64.6 percent, with 60 percent for two and three star hotels.
The average room rate, which is the lowest among Southeast Asian countries, stood at $100 for four and five star hotels and $50 for two and three star hotels.
For budget hotels, at least until 2016, the growth is predicted to slow down due to the high price of land. “Land prices are unpredictable because there is no standard. This makes it difficult for investors,” she added.