Bali traffic jam

The day was dragging, the conference panel dawdling, then someone in the audience raised the burning issue of Brand Bali: are historic images of peaceful rice paddies and pristine beaches – well, just a little out of date?

Suddenly, everyone woke up, people became engaged, had an opinion. Bali, what is it? That’s the question on everyone’s minds.

But there’s no easy answer – Bali’s a complicated place, a booming tourism destination with more than 10 million visits last year, well up on 2012, and further strong growth forecast.

Yet it remains a tropical paradise – still madly beautiful, intriguing, spiritual and stylish – but one that is facing all the classic Southeast Asian growth issues: pollution, traffic jams and inadequate infrastructure, to name just a few.

Of course, the flip side is that the urbanisation of Bali also brings benefits – great restaurants, beach clubs, bars and shopping are some that come to mind.

Yet these aspects of a Bali break are largely (and understandably) ignored by much of the Balinese tourism industry, which appears to have made a collective decision that nothing has changed since tourists first started coming in the 1980s.

Clean beaches sell, urbanisation (most prevalent in the Denpasar-Kuta-Legian-Seminyak corridor) does not, certainly for the traditional markets such as Australia and Europe.

The fast-growing Chinese market may be different – short-term at least – but we’ll see.

The quieter side of modern Bali. Late afternoon last week in Sanur, where pedestrians still outnumber the bikes, cars and trucks...

The quieter side of modern Bali. Late afternoon last week in Sanur, where pedestrians still outnumber the bikes, cars and trucks...

You feel the Bali industry is spooked by a barrage of negative publicity in a range of influential websites and publications under such dramatic headlines as “Why to take Bali off your bucket list” in the Huffington Post.

This critical article, which has been reproduced elsewhere, claims: “The resorts are selling a mirage which the visitor doesn’t find out about until it’s too late.

“The tourism web sites highlight pictures of clean sandy beaches, yet the trash is just below the ridge line of the sand, invisible in the photos, but quite apparent when one walks a few steps to the beach.

“Kuta Beach fronts the populated parts of Bali but that is no excuse for the piles of trash.”

None of the panel actually addressed the Brand Bali question with their attitude summed up by the comment, “We need some public relations”, rather than a co-ordinated response.

The attitude (again understandable) seemed to be we can’t do anything about the roads or rubbish so let’s just put a positive spin on things and sell some rooms.

In a broader context, the growing pains experienced by Bali are prevalent troughout the region and especially Indonesia.

Speaker Douglas Ramage from Bower Group Asia said Indonesia is Asia’s fastest urbanising country, with 65% of people now living in cities.

It’s “officially a middle income nation” with the Gross National Product per capita breaching the lowly sum of USD4000 and has the highest level of consumer confidence in the world, according to Nielsen research, although there’s increasing suspicion of foreign investment with growing protectionism.

Internet use has doubled in the past three years while the country’s rate of aviation growth is second to only one – China.

All of these trends are manifested in Bali, where an astonishing 67 hotels are either under construction or in development, far more than any other region of Indonesia.

The rush to build has sent land prices soaring.

Tom Oakden from Jones Lang LaSalle told delegates that land values on Jalan Sunset, which runs behind Kuta and Legian and is nowhere near the beach, have grown 10x in just the past five years.

Hundreds if not thousands of villas are also being built, leading to fears of over-supply, a common emotion in Bali where rapid growth has been forever but demand has always kept pace.

“You’re getting 67 new hotels but probably half of them are not feasible,” said Rio Kondo, VP of Development for Accor in Indonesia.

Hence, there was some doubt when STR Global presenter Jesper Palmquist said KPIs for the Bali hotel market are heading in the right direction.

He said overall occupancy was 64.7% for the year to the end of April, up 8.6%.

Strikingly, Mr Palmquist said rates rose fastest in the luxury and upscale sector up by 17% or 18% in the year to the end of April.

Blue skies, six foot swell, 28 degree water, offshore winds and a game of cards. Scene from an Uluwatu warung, June 2014

Blue skies, six foot swell, 28 degree water, offshore winds and a game of cards. Scene from an Uluwatu warung, June 2014

Anecdotally  word is that parts of the industry, generally older properties bereft of modern marketing techniques, are struggling to sell rooms for a decent rate in a very crowded market.

A lack of market segmentation – where should I stay and why? – doesn’t help.

These properties are getting left behind – squeezed by rampant growth in luxury and also budget properties, which are sprouting like mushrooms after rain.

Ngurah Wijaya, chairman of the Indonesia Tourism Business Association, told the Bali Post that “occupancy of those old small hotels could only reach 30% to 40%.

“In the low season, some of them have no guests at all.

“They’re unable to compete with new city hotels offering better facilities.”

And yet the mood at the hotel investment conference I attended – developers, owners operator of 4-5 star properties – was largely buoyant, though occasionally bemused.

Bali is what is it is. Growth will continue, no question, and we’ll just deal with the issues as they arise. That was the sentiment.

As for Brand Bali? It’s what you want it to be.

A luxury villa in the hills, a beachfront at Sanuar or a crass Kuta bar.

Many visitors find their own Bali niche and keep coming back.

That’s the most important thing – many people love the place, warts and all.

Bali is special. It will find a way, if only people would put their rubbish in the bin!

Share and Enjoy: