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MAJOR STRUCTURAL SHIFTS IN SEASONALITY CREATE SIGNIFICANT CHALLENGES FOR BALI'S HOTELS & RESORTS

Updated: Feb 18, 2023

ID HOTELIER - The volatility of Bali’s hotels & resorts is best exemplified by the ever-evolving seasonality patterns of its 4 and 5* properties. Since the late 1980s, the average high season included the months of September, October, November, and December, while the low season included February, March, April, and May.


Over the fifteen years (2005-2019) seasonality patterns significantly changed each quinquennial as illustrated in the accompanying graphs. It culminated in the latest quinquennial (2015-2019) with the largest variations in monthly occupancy recorded since 2000.


Occupancy Seasonality for Bali's Hotels & Resorts
Occupancy Seasonality for Bali's Hotels & Resorts

Seasonality is such an important part of Bali's hotel and resort industry and so ubiquitous that we tend to treat the phenomena as static and not evolving. Seasonality has a profound impact on the efficiency and profitability of hotels & resorts on the island. It is a crucial challenge for Bali and has been held responsible for creating many difficulties faced by the industry: problems in gaining access to capital, obtaining and holding full-time staff, low returns on investment causing subsequent high risk in operations, and problems relating to peaking and overuse of facilities.

Seasonality is often taken for granted as an inevitable hotel and resort industry feature. It is often assumed that the seasonal variations are identical, or almost identical patterns which occur from year to year. But as our graphs below demonstrate, the seasonal nature of room demand is constantly changing. The lack of in-depth and longitudinal research has hindered the industry's understanding of this pervasive force in the hotel and resort sector.

Seasonality patterns are generally thought of as stable and well-established. However, our research has found that seasonality patterns are not regular and that monthly occupancies can trend up or down by a significant amount even over a three to four-year period.


While seasonality is widely perceived in a negative light, many strategies are used to address the effects of monthly, weekly, daily, or even hourly seasonality. These include pricing strategies, diversifying the service offering, market diversification, and seeking assistance from the government and industry. Increasing the length of the peak season and modifying the timing of school holidays are other strategies.

Although many strategies and tactics can be transferable from one market to another or one chain scale to another, more detailed research is necessary to investigate the strategies and tactics that have proved successful in exploiting the opportunities presented by seasonality.


To what extent will the pandemic result in major structural shifts in the seasonal patterns of hotel demand in Bali?

 

About Writer

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.


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