Too Many Vacancies Has Bali Governor Weighing Hotel-Building Moratorium

Jakarta. Bali Governor Made Mangku Pastika plans to halt the construction of hotels in key tourist areas on the island because the supply of rooms far exceeds demand.

“There is much more supply of hotel [rooms] than demand, there have been calls for us to soon put in place a moratorium,” he said.

In a meeting with tourism executives in Denpasar on Thursday, Pastika said the huge number of hotels, especially in the main tourist districts of Badung, Gianyar and Denpasar, has led to widespread traffic congestion.

He added that despite an increase in tourists, average occupancy rate of hotels in Bali was only around 70 percent. The Bali Tourism Office gave a lower figure — 56 percent.

Pastika attributed the low occupancy rate to the abundance of illegal hotels and villas, which took away clients from established hotels.

“We have to take concrete steps so official hotels do not continuously suffer losses,” he said.

The governor said he would soon send a letter discussing the issue to the Culture and Tourism Ministry and the Investment Coordinating Board (BKPM).

Pastika added that hotels would still be built, but only in less-developed districts, including Buleleng to the north and Karangasem on the east coast.

“For the northern Bali region, we can still issue permits,” he said, citing Buleleng

Under the regional autonomy law, however, mayors and district heads — not the governor— directly issue construction and business permits.

Nyoman Suwirya Patra, head of the Bali Investment Coordinating Board, said the value of investment on the island in the first half of the year hit Rp 4.2 trillion ($466 million), far more than Rp 2.1 trillion for full-year 2009.

“The hotel sector really dominates investment compared to the other sectors,” he said.

Perry Markus, secretary of the Bali chapter of the Indonesian Hotel and Restaurant Association (IHRA), said the number of hotel rooms in Bali, including in villas, could grow by 2,000 a year. The resort island now has 46,145 registered hotel and villa rooms.

Perry agreed the booming development of illegal hotels and villas in Bali caused low occupancy, adding the number of the unregistered hotels “is quite significant, at some 17,000.”

He supported Pastika’s plan to put a moratorium in place but said another solution would be to firmly enforce the law.

“More important is the enforcement of the law, by taking actions against illegal villas which have disturbed Bali’s tourism industry,” Perry said.

The Tourism Office earlier reported that in the first seven months of the year, foreign tourist arrivals reached 1,180,118, up 10.23 percent compared with the same period last year.

Australians accounted for the largest portion, at 23.56 percent, in total number of tourists over the period.