Hotel Investment is Still Profitable. Indonesia is still a potential market for hotel investors. Even though the annual average hotel occupancy rate has decreased, Indonesia has a great opportunity to increase the tourism and MICE sectors in order to encourage foreign tourist visits (tourists).
Property consultancy firm Colliers International said Bali is a very attractive area for hotel investors that make Hotel Investment is Still Profitable. According to Colliers’ records, during 2016-2019, Bali will add 15,592 new hotel rooms of which 7,684 rooms will be contributed from the construction of five-star hotels.
Some five-star hotels that are under construction in Bali include Jumeirah – Jimbaran (104 rooms), Marriott Saba Bay Resort – Gianyar (200 rooms), Amari Pecatu Bali (435 rooms), The Westin Ubud Resort & Spa (110 rooms) and Waldorf Astoria Bali Uluwatu (98 rooms).
Hotel Investment is Still Profitable, Here is The Facts
Associate Director of Colliers International Indonesia said that Bali is indeed the prima favourite for investors because it has its own prestige to own a hotel on the Island of the Gods. Meanwhile, for property developers, they are building hotels in Bali to complement their property portfolios. Not as the main income.
According to him, as a major destination in the world, Bali has the opportunity to continue to increase foreign tourist visits. Moreover, the Ministry of Tourism is targeting 20 million foreign tourists to visit Indonesia by 2020.
The number of tourists coming to Indonesia is still inferior to Malaysia. There is an untapped market potential. If the government is serious about this, the hotel industry will increase. Colliers International Indonesia Senior Associate Director Investment Services Aldi Garibaldi added that the hotel industry is still attractive considering the opening of many new tourist destinations, such as Wakatobi, Raja Ampat, and Lombok.
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Opening a hotel in Lombok makes a lot of sense. Hotel prices there are quite high, higher than Bali. This is because hotels there are very minimal.
Hotel Investment is Still Profitable, Many Hotels for Sale
However, Bali and Jakarta are still the locomotives of domestic hotel growth. However, Adi revealed, many of the hotel owners sold their hotels to other parties. Colliers is in charge of selling four and five star hotels in Bali, mostly because they had it for a long time, more than ten years. Property prices are already high, and they are selling.
For second- and third-tier cities, the demand for hotels is quite high, because hotels are still very minimal. There the ADR (Average Daily Rate) is quite high. In 2016, there will be land purchase transactions in tier one and two which are devoted to hotels.
Apart from that, the government has also implemented various incentives to encourage tourism, for example, by deregulating regulations allows tourism companies import goods without tax.
However, what is also a challenge is providing human resources in the tourism and hospitality sector in new tourist destinations, especially in Eastern Indonesia. This is because the level of education between West and East Indonesia is still lacking.
The movement of human resources from West to East also creates problems. Not all Indonesians want to move. The contribution of the Indonesian tourism sector indirectly contributes 20-30% of the Gross Domestic Product (GDP).
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Bali is not only a paradise for tourists, but a paradise for hotel condo investors
Bali is not only a paradise for tourists, but a paradise for hotel condo investors. This is because the income earned from the hotel rental business in Bali is increasingly promising. If the hotel occupancy or occupancy rate is high, the hotel room rate is also high. In the end, the rental value is higher, the higher.
The rental value obtained, the faster the return on capital is made. The Kuta Beach area is a prestigious area because it is always busy for 24 hours and its location is very strategic, which is only 15 minutes from Ngurah Rai Airport. In addition, hotel occupancy rates in the Kuta Beach area are on average above 75% and the room price per night is around Rp. 1 million per night. This is what makes the hotel rental business in the Kuta Beach area increasingly promising.
The Kuta Beach area is the number one location on the Island of the Gods. This area is a favorite surfing spot and is surrounded by culinary centers, cafes, and entertainment centers from night to morning. Not only that, this area which is also integrated with Jimbaran Beach is a place for tourists to enjoy the sunset.
The cost of constructing a whole tower hotels excluding land investment, meanwhile, the construction cost for the hotel alone requires funds of around Rp. 600 billion. If calculated with the total number of Raffles Hotel rooms as many as 180 units, the construction cost per room of this super luxury hotel will reach Rp. 3.3 billion! Meanwhile, many developers has not only built one, but three luxury hotels in the same location. The other two are W and Rosewood. “For W Hotel, we have budgeted a cost of Rp. 600 billion with a total of 300 rooms. So the construction cost reaches Rp. 2 billion per room adding that the range of room rates to be set at the Raffles hotel is at the level of 300 US dollars IDR 2.9 million) -325 US dollars (IDR 3.2 million) per night.