Emerging trends in Bali performance, development

The COVID-19 pandemic severely impacted Bali’s hospitality sector, bringing it to a standstill.
Yet, in a remarkable display of resilience, Bali’s 2023 performance has not only rebounded but has surpassed 2019 levels in many areas, signaling a vibrant and promising future.

However, it's important to note that this recovery has been varied across different regions of Bali, revealing fascinating new trends and opportunities for potential investors.

Here is a summary of emerging trends in the marketplace:

Visitor trends: Shifting geographies and growing numbers
In 2023, Bali continued to attract a strong domestic market with visitor numbers consistently just under 10 million. International arrivals reached 5.3 million, compared to 6.3 million in 2019.

While the return of Chinese tourists has been slow, there has been a surge in visitors from Australia, Korea, Singapore, India, and Europe.

The top five geographical sources have been reshuffled with Australia taking back the lead, followed by India, China, the U.K., and the United States. These shifts present a valuable insight into where demand is growing and where investments may yield high returns.

Market performance: Surpassing pre-pandemic levels
2023 witnessed a 28% increase in both Average Daily Rate (ADR) and Revenue per Available Room (RevPAR) compared to 2019.

The top five geographical sources have been reshuffled with Australia taking back the lead, followed by India, China, the U.K., and the United States. These shifts present a valuable insight into where demand is growing and where investments may yield high returns.

Pierre Marechal

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As of May 2024, year-to-date data shows that while ADR remains flat, RevPAR has increased by over 10% across all segments due to higher occupancy.

This indicates a robust market performance overall, but also highlights the importance of strategic location choices for investors.

Occupancy growth: Sanur and Tanjung Benoa lead the way
Sanur and Tanjung Benoa have emerged as the frontrunners in occupancy growth compared to 2019.

Sanur is a once forgotten gem which has been revitalized with significant investments starting with the Andaz Bali, a luxury lifestyle beachfront resort that opened in 2021.

New attractions include the freshly opened ICON Bali shopping mall, which offer modern entertainment, shopping options and the first IMAX Theatre in Bali.

Additionally, the Bali International Hospital and other medical facilities have made Sanur appealing to retirees and families.

The calm, laid-back atmosphere, combined with a rich cultural heritage and beautiful beaches, make Sanur an attractive destination for investors looking for steady occupancy rates and long-term growth.

Tanjung Benoa continues to benefit from its proximity to the Benoa Harbour and cruise terminal as well as Nusa Dua’s BTDC.

Tanjung Benoa's appeal also lies in its peaceful environment, pristine beaches, and opportunities for water sports and relaxation, making it a compelling investment destination.

Conversely, areas like Jimbaran/Uluwatu and Nusa Dua have yet to fully recover to pre-pandemic occupancy levels, indicating a need for cautious investment.

Premium destinations: High ADR in Jimbaran/Uluwatu and Ubud
Jimbaran/Uluwatu leads the charge in ADR, followed closely by Ubud.

Jimbaran/Uluwatu has firmly positioned itself as a luxury destination. New openings like the Raffles Bali or the rebranded Umana Bali, LXR Hotels & Resorts add to its allure.

The newest and most opulent beach clubs such as Savaya Bali (rebranded from Omnia), along with gourmet restaurants like CIRE at Alila Villas and Sangkar at The Bulgari, make Jimbaran/Uluwatu a magnet for affluent travelers.

The breathtaking cliff views and exclusive ambiance further enhance its appeal, making it a prime target for high-end investments.

As of June 2024, 74% of the pipeline room count is in the upscale, upper upscale, and luxury segments, reflecting a strategic focus on attracting high-end tourists.

Pierre Marechal

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Ubud, known for its serene atmosphere, wellness retreats, and tranquillity, continues to draw visitors willing to pay a premium for unique experiences. Ubud’s attractions include its rich cultural heritage, traditional arts, and holistic wellness center, making it a haven for those seeking relaxation and rejuvenation. For investors, Ubud represents a market with high ADR and strong demand for luxury wellness tourism.

RevPAR champions: Top performance in Jimbaran/Uluwatu and Ubud
Jimbaran/Uluwatu and Ubud also dominate in RevPAR, bolstered by their premium offerings and exceptional visitor experiences.

The combination of high ADR and strong occupancy rates drives their impressive RevPAR figures, indicating robust revenue potential for investors.

Inventory trends: Shift towards upscale and luxury segments
The pipeline for new hotel rooms has contracted by around a third from December 2019 to June 2024. While this might appear pessimistic, there has been a notable rise in villa constructions, which are not included in these statistics.

Of the resorts in the 2019 pipeline, 17% have opened (all with international operators), 25% remain in development, and the status of 49% is unknown (with more than half involving local operators).

Notably, independent hotels still comprise the highest percentage of the inventory, increasing from around 65% in 2019 to 70% in 2024 in terms of room count. This highlights the continued appeal and resilience of independent operators in Bali’s hospitality market.

As of June 2024, 74% of the pipeline room count is in the upscale, upper upscale, and luxury segments, reflecting a strategic focus on attracting high-end tourists.

For investors, this shift towards luxury indicates where future opportunities may lie, particularly in segments catering to affluent and discerning travelers.

Conclusion: Embracing a brighter future
Bali’s hospitality sector is not just recovering; it is thriving, showcasing an incredible comeback from the pandemic’s challenges.

With evolving tourist preferences and strategic investments, Bali's future shines bright.

Investors have a unique opportunity to tap into this resurgence, particularly in high-growth areas like Sanur, Tanjung Benoa, Jimbaran/Uluwatu, and Ubud.

By aligning with these trends, sovereign funds, investment funds, and individual hotel owners can contribute to and benefit from Bali’s growing success.

Contributed by Pierre Marechal, vice president, Strategic Advisory and Asset Management, JLL Hotels & Hospitality Group, Singapore

The views and opinions expressed in this column do not necessarily reflect the opinions of Hotel Investment Today or Northstar Travel Group and its affiliated companies.