Source:Hotel Indigo, Bali MARKET REPORT Bali Hotel & Hotel Residences FEBRUARY 2018 BALI: Hotel & Hotel Residences Market Report - February 2018 Bali Visitor Arrivals 2016 was a solid year for Bali, with international and domestic visitor arrivals recording double-digit YoY growth – 23% and 21% respectively. With increasing direct flight connectivity, visa exemptions and government promotion, Bali continued the roll for the first three quarters of 2017. YTD September 2017 foreign arrivals grew a further 25% to 4.6 million during the same period last year. Full steam ahead, the Island of the Gods looked set to achieve its target of 5.5 million foreign visitors by the end of 2017. This accounts for 40% of Indonesia’s ambitious total Source: Sol Beach House Legion, Bali foreign arrivals for 2017. And then there were few… Alas, in September 2017, increasing seismic activity at Mt Agung caused widespread panic in Bali. Alert levels were Like the revered Agatha Christie novel ‘And Then There raised and villagers were forced to evacuate for fears of Were None’ where visitors flocked to Soldier Island with an eminent eruption. The first eruption finally occurred in such wonder and excitement, Bali entered Q3 2017 on a late November 2017, dusting the surroundings with dark high as droves of visitors flocked to the Island of the Gods. ash and forcing Ngurah Rai International Airport to close. Although the airport opened a few days after, the damage Increasing flight connectivity, visa-free policies and toned- had already been done. Fears of an even bigger eruption down supply growth over the last year led to excellent rerouted concerned tourists to other destinations as the performance across the market. YTD October 2017 RevPAR peak holiday season arrived. Furthermore, the Chinese performance was up 7% compared to the same time last government grounded airlines destined to fill Bali’s beds year, on the back of healthy ADR and occupancy growth. with Chinese FIT and groups. China took over as the number one foreign feeder market The island became a ghost town in December recovering for Bali, surpassing Australia and growing by a whopping slowly for the Christmas/New Years peak holiday period. 59% per YTD September 2017 figures. It has had a dramatic effect on the community, but historically, Bali has proven to be resilient over time and Just when all seems to be fine, alas, nature played a in this case, arrivals have increased again slowly but surely better hand. Mt Agung awoke and rumbled causing as both Mt Agung and the media calm down. After all, concerns and then eventually erupted sending waves of almost all major tourism areas are located much further panic across the island and shutting down Ngurah Rai than the 10-kilometre radius danger zone from Mt Agung. International Airport for a few days. Though the airport has since re-opened and flights have resumed operations Bali Arrivals (even China flights in early January due to Chinese 10,000,000 government travel warnings, PLEASE let this be a lesson to 9,000,000 destinations seeking and becoming reliant on one source 8,000,000 market!), worried travellers cancelled year-end and New 7,000,000 Year trips to Bali. 6,000,000 5,000,000 The media did everything it could to stoke the fear fire, 4,000,000 without any intention I’m sure, filling its 24-hour coverage 3,000,000 2,000,000 liberally using terms such as mass evacuation, impending 1,000,000 eruption, global climate impact etc. As the peak holiday 0 season loomed, Bali was a ghost-town - mirroring Soldier 2012 2013 2014 2015 2016 Island - visitors disappeared… International Domestic Source: BPS www.horwathhtl.com www.c9hotelworks.com 2 BALI: Hotel & Hotel Residences Market Report - February 2018 Source: Hotel Indigo, Bali Nationality Mix • Still going strong mate! Up till 2016, Australia was the number one foreign source market for Bali. • China the powerhouse: YTD September Though China has taken over, Australians are still very 2017 numbers made China the number one foreign much appreciated in Bali for their large numbers and source market for Bali. Arrivals from China grew by a high spending power. With a relatively easy flight and whopping 59% over the same period last year, making the recent visa exemption, arrivals from Australia are up 26% of total foreign arrivals. The rapid growth was not expected to grow much in the upcoming years, aided by increasing flight connectivity driven by zero- barring any major external circumstances. based tour groups. • The Russians are back: YTD September 2017 • Indians incoming: In recent times, India arrivals figures indicate that this market grew massively by 60% have grown rapidly. 2016 recorded a 58% YoY over the same period last year – the highest growth increase in arrivals while YTD September 2017 figures rate for a single foreign market. continued that trend to record a 54% growth over the same period last year. The growth can be attributed to • More Korean restaurants? South Korean arrivals the opening of the first direct links between India and have grown in the double digits by 30%. Just last year, Indonesia. Furthermore, Bali’s green paddy fields, rich arrivals were down 2% YoY compared to 2015. Will culture and abundant yoga studios are all attractive restaurants bend to the k-wave and introduce kimchi to selling points to young Indian travellers. their menus? Top 5 Foreign Markets, Share of Total Foreign Arrivals Top 5 Foreign Markets, YTD Sep 2017 Growth Source: BPS www.horwathhtl.com www.c9hotelworks.com 3 BALI: Hotel & Hotel Residences Market Report - February 2018 Hotel Performance MIDSCALE (USD 40 – 101): With increasing competition in USD ADR decreased YoY since 2012 on the back the upscale segment, resorts have been cautious in raising of increasing competition and price wars to boost rates in fear of losing market share. occupancy. Subsequently, RevPAR declined from Upscale YTD Oct 2016 YTD Oct 2017 % Δ 2013 to 2016 before enjoying an upkick YTD October Occupancy 73% 75% 2% 2017 of 7% (ADR up 4%, RND up 3%). ADR (IDR) 1,680,000 1,680,000 0% ADR (USD) 126 126 0% YTD OCT 2016 % Δ YTD OCT 2017 RevPAR (IDR) 1,232,000 1,259,000 2% 72% Occ. 3% Δ 75% Occ. RevPAR (USD) 92 94 2% IDR 1.7M ADR 4% Δ IDR 1.86M ADR RevPar IDR 1.29M 7% Δ RevPar IDR 1.39M Average Length Of Stay - By Rate Segment Another indication of the mass-market demographic shift: Segment Performance in 2015 and 2016 ALOS remained above 3.0 across rate segments but YTD October 2017, ALOS dropped below LUXURY (>USD 350): For those who say the luxury market 3 in 3 from 4 rate categories. The upper upscale segment is declining, think again. experienced the most significant drop in ALOS from 3.4 in 2016 to 2.7 YTD October 2017. Luxury YTD Oct 2016 YTD Oct 2017 % Δ Occupancy 55% 61% 10% Average Length of Stay ADR (IDR) 6,609,000 7,011,000 6% 4 ADR (USD) 495 524 6% 3.5 2015 RevPAR (IDR) 3,652,000 4,273,000 17% 3 2016 YTD 2017 RevPAR (USD) 274 319 17% 2.5 2 1.5 UPPER UPSCALE (USD 151-349): All performance matrixes 1 YTD Oct 2017 have grown positively for YTD October 2017. ALOS 2.8 Days 0.5 Upper Upscale YTD Oct 2016 YTD Oct 2017 % Δ 0 Luxury (>$350) Upper Upscale ($151-$349) Upscale ($101-$150) Midscale ($40-$100) Occupancy 75% 77% 2% Source: BHA and Horwath HTL ADR (IDR) 2,869,000 2,952,000 3% ADR (USD) 216 221 3% RevPAR (IDR) 2,155,000 2,270,000 5% Market Performance Summary RevPAR (USD) 162 170 5% Market Performance Summary 180 100% UPSCALE (USD 101-150): With increasing competition in 160 90% 80% the upscale segment, resorts have been cautious in raising 140 70% rates in fear of losing market share. 120 Occupancy % 60% 100 50% Upscale YTD Oct 2016 YTD Oct 2017 % Δ 80 40% 60 Occupancy 73% 75% 2% 30% 40 ADR (IDR) 1,680,000 1,680,000 0% 20% 20 ADR (USD) 126 126 0% 10% 0 0% RevPAR (IDR) 1,232,000 1,259,000 2% 2012 2013 2014 2015 2016 YTD Oct 2016 YTD Oct 2017 ADR RevPAR Occ. RevPAR (USD) 92 94 2% Source: BHA and Horwath HTL www.horwathhtl.com www.c9hotelworks.com 4 BALI: Hotel & Hotel Residences Market Report - February 2018 Performance By Location Performance By Location - YTD October 2017 Source: TBC Performance Growth Rates: Average Length Of Stay By Location YTD October 2016 vs YTD October 2017 4.5 Occ. % ADR % RevPAR % 2015 Area 4 Change Change Change 2016 YTD Oct 2017 3.5 Kuta 4% -3% 1% 3 Jimbaran 1% 8% 9% 2.5 Ubud 10% 4% 14% 2 1.5 Legian & 0% 5% 5% Seminyak 1 Nusa Dua & 0.5 4% 5% 10% Benoa 0 Kuta Jimbaran Legian & Nusa Dua & Ubud Others Seminyak Tanjung Benoa Source: BHA and Horwath HTL Source: BHA and Horwath HTL www.horwathhtl.com www.c9hotelworks.com 5 BALI: Hotel & Hotel Residences Market Report - February 2018 The Mount Agung Effect LUXURY (>USD 350): Lost RND was far more severe in the Following the awakening of Mt Agung in October, luxury segment post airport closure in the first 2 weeks the global newscasts of mass evacuations and the of December when 60% of room nights were cancelled. ultimate closure of Ngurah Rai for a couple of days in By month end, the preliminary numbers show a YOY late November, we surveyed Bali hotels to gauge the December occupancy loss of 20% points to 27%.