A new C9 Hotelworks and Horwath HTL report on Bali reveals warning signs of a shift to mass market tourism, with arrivals growth accompanied by lower yield per tourist and shorter average lengths of stay.
Occupancy was up more than four per cent in 2016, with “solid occupancy” across all categories (excluding luxury) driven by increasing foreign direct arrivals, a slowing in new hotel openings and a further slashing of rates.
Kuta beach, Bali
Bali’s domestic market in 2016 was up 12 per cent year-on-year to around 7.1 million while foreign arrivals increased six per cent to four million, bringing total arrivals to over 11 million for the first time.
There was a marked shift towards mainland China, which now holds second position in terms of international arrivals and is forecasted to overtake the legacy Australian segment in 2017. According to a C9 statement, this increase can be attributed to a diversion of mainland Chinese traffic to Bali after Thailand’s government banned zero-dollar tours.
A 2016 survey by the Bank of Indonesia highlights that the typical Chinese tourist's expenditure is around one-quarter that of a typical European or Australian tourist. With the proportion of Chinese tourists increasing, the economic benefits per new tourist is reducing.
As well, the average length of stay in Bali year-to-date September 2016 fell to 3.1 days, down from 3.2 days year-on-year. Denpasar was hardest hit, seeing a fall from 4.5 to 2.7 days year-to-date September 2016.
The report concludes that mainland China is arguably a sensible target market for meeting national arrivals goals since it is only a short- to medium-haul catchment from Indonesia, plus increasing direct flights and a massive population, which gives potential for rapid-fire growth.
But taking heed from Thailand’s experience, it is essential to foster other markets simultaneously to balance quantity and quality of foreign arrivals.