Bali hotels slash rates

LAST CHANCE? A tourist sits near her surfboard at Kuta beach, Bali. As the global recession continues, hotels in Bali are slashing room rates

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Hotels in Bali are slashing room rates amid falling occupancies as the global economic downturn takes its toll on the tourism-dependent economy.

Total foreign arrivals hit a record 1.97 million last year as the island recovered from the impact of the 2005 terrorist attack. The second biggest market behind Japan, Australia accounted for more than 300,000 visitors, up 51 per cent from 2007.

However, the recovery is expected to be disrupted amid the international credit crunch, with the Bali Tourism Authority estimating foreign visitor numbers will drop 8.6 per cent to 1.8 million this year.

Hotels are scrambling to fill rooms. Budget and mid-range properties popular with Kiwis are offering the steepest discounts, with some halving published rates, while upmarket resorts hit by a slowing in the executive market are trying to be more creative in their response to the downturn.

"Some two- and three-star hotels are panicking and cutting their rack rates," said Bali Hotels Association executive director Djinaldi Gosana.

"That's a bad idea. We know from experience after the Bali bombings that once we cut the rate, it's very difficult to put up again."

The three-star Melasti Beach Hotel in Legian is offering its standard room at US$45 (NZ$87) net per night, down from US$96, and is throwing in breakfast for free, while the four-star Dynasty Hotel in Tuban has cut its standard rate to US$80 from US$145.

The price war is prompting a rethink from many Australians who would otherwise be reluctant to travel in the current economic climate.

"I know a lot of people who have cancelled European trips and are instead coming to Bali," said Fiona Healy from Melbourne, who spent two weeks on the island.

Meanwhile, although top-end hotels are sharing the pain, they are more reluctant to reduce rates, Djinaldi said.

Instead, they are offering bonus nights, meals or spa treatments to wealthy guests who are reining in lavish lifestyles.

The exclusive Amanresorts group, which has three properties in Bali, said it had no plans to reduce rates, but had cancelled a planned hike that would have taken its minimum published rate from $US908 to US$1029.

"We are not dropping our rates," said Amanresorts Indonesia area manager Monty Brown.

"However, we recently took a decision to maintain our 2008 rates throughout 2009 rather than introduce a planned increase."

Some hotels such as The Bale in Nusa Dua were quick to increase rates at the height of peak season last year before tourist numbers started dropping.

Now, they are loathe to bring them back down. The Bale's general manager Jose Luis Calle said he believed bookings would pick up in the next few months. He is holding prices steady despite a 20-30 per cent drop in occupancy this month from a year ago.

"We just put our room rates up by 10 per cent last August to September following a refurbishment and we are maintaining those, but with added values from bonus room nights and meals depending on the market, which makes the rate pretty much the same as before the hike," he said.

"We are offering more value for money because people are thinking twice about going on holiday now. This time it's not just a Bali issue, it's global."

This sentiment is echoed by The Legian, whose top villa carries a US$3000 per night price tag in the fashionable seaside resort of Seminyak.

The hotel is experiencing a 10-15 per cent dip in occupancy, sales and marketing director Samuel Gacos said.

"Our focus is not rate adjustment but rather extending more value to our offers," he said, adding "There's a shift in travel patterns generally. The frequency of travel is reduced, the average length of stay is shorter, and bookings are made last minute".