ID HOTELIER - Bali’s declining average length-of-stay (LOS) for foreign and domestic visitors in star-rated hotels has significant implications for the performance of the island's hotels & resorts and the ongoing management of its tourism industry. The average LOS for foreign guests in Bali’s star-rated hotels fell 0.7 nights from 3.7 nights in 2004 to 3 nights in 2019, the year preceding the pandemic, while the average LOS for domestic guests declined by 0.8 nights from 3.2 in 2004 to 2.4 nights in 2019.
LOS is a key metric in the profitability of Bali’s hotels. In general, shorter stays are less profitable due to the higher costs of acquiring bookings and servicing rooms; therefore, increasing the length of stay means lower costs per room occupied. To compensate for the loss of guest nights due to a declining LOS since 2004, Bali’s star-rated hotels hosted about 1.1 million additional foreign and 970,000 domestic guests in 2019.
LOS also has a major impact on Bali’s infrastructure and resource use. With a declining LOS, transport infrastructure requirements such as airports grow in comparison to hotel capacity, as greater tourist numbers require additional airport capacity and other transport infrastructure.
While arrival growth numbers continue to attract the headlines, increasing LOS is likely to become a much more important metric in the future.
Bali’s star-rated hotels provide an example of the impact of declining LOS, a phenomenon challenging many tourist destinations and countries in Southeast Asia.
Ross Woods is a seasoned hotel investment advisor with over 30 years of global experience in hotel asset management, portfolio management, and hotel advisory services. Known for his collaborative-based consulting style that integrates a high level of strategic and analytical expertise, his “smarts” are sought by clients to solve complex issues, make better decisions and realize the highest risk-adjusted investment returns. His clients include banks, private investors, REITs and hotel management companies in the United States, South East Asia, Australasia, Europe, and Dubai.