COVID-19 and Bali Tourism

BALI’S TOP MARKET SOURCE

Welcoming 6.3 million international arrivals in 2019, Bali tourism continued to flourish, recording a 10.2% compound annual growth rate (CAGR) between 2009-2019. 2020 was anticipated to be another robust year for Bali until the Coronavirus outbreak (COVID-19) took place, resulting in Indonesia banning all incoming flights from China on February 5th. Subsequently, Bali Tourism Board stated that a significant drop in Chinese tourist arrivals is anticipated with the potential to generate a loss of IDR1 trillion (US$73million) per month from March 2020.

Whilst historically Australia has been the top visitor market for Bali, over the last fi ve years, an average of 20% of all international arrivals have come from China. However in 2017, China overtook Australia’s spot and became the first ever market source to reach the million-arrival mark. Chinese tourist arrivals to Bali peaked in 2018 recording a 27.4% CAGR between 2010-2018, albeit showing a 13% decrease in 2019.

CHINESE ARRIVALS GROWTH & BALI HOTEL PERFORMANCE

When examining the growth of Chinese arrivals against the Bali hotel performance, taking into account the constant changes in room supply, a mild correlation between the growth of Chinese tourists and the growth of Bali hotels’ occupancy and ADR can be observed. Over the last eight years, the increase in Chinese arrivals has had a positive impact on the Bali hotels’ occupancy growth albeit a negative impact on its ADR growth. In addition, the Bali Hotel Association reported the average length of stay of Chinese tourists to be four to five days while Australian, American and European tourists, stay on average for two to four weeks. Therefore in terms of profitability, tourists from Australia, America and Europe contributed more to the tourism economy of Bali than the Chinese. This observation suggests that Bali can turn this crisis into an opportunity by targeting other source markets while focusing more on spending power rather than volume of visitors.

China, as the world’s largest outbound travel source will heavily affect many key markets in the region and Bali will not be an exception. However, with the ongoing efforts from Bali Authorities to keep the island COVID-19-free, demand from other markets is expected to remain stable. By diversifying its inbound traveller sources, Bali will ultimately enjoy higher profitability once tourism rebounds.