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Bali foreseeing an end to tourists' fears SEMINYAK - Hotels are opening, a new condominium hotel and elite villa projects are enticing buyers and a new selection of chapels is available to couples who want an island wedding surrounded by bright blue seas. That is how Bali always wants it to be. But growth in the commercial property segment has been slow and painful, coming against the backdrop of two tragedies: the bombing in October 2002 that killed 202 people, mostly Australian tourists, and a second one in October 2005 that killed 26.

Even now, hoteliers lament that a travel warning issued by a Western embassy (usually the United States or Australia) can lead to canceled bookings, laid-off staff and depression in the villages. It is still not clear what the future will bring, but businesses on the island are looking ahead. Michael Burchett is general manager at the 289-room Conrad Bali Resort & Spa in Tanjung Benoa, a newly developed area adjacent to Nusa Dua, as well as head of the Bali Hotels Association. "We signed to build this property before 9/11 and broke ground in November 2001.

"We carried on building through SARS, and then October 2002 happened. We had an evaluation but, no, we agreed to continue, only delaying things by about six months," he said. "The decision to continue was economic, but it was also for the community. We wanted this project to act as a confidence-builder," Burchett said. Things picked up after the 2002 bombings, only to falter again in December 2004 when the devastating tsunami swept across the Indian Ocean.

"People needed a geography lesson," Burchett noted wryly, as Bali was nowhere near the tsunami's damage zone and actually should have gained business if people had realized. (The tsunami that hit Java earlier this week produced only small waves on Bali.) The 2004 tsunami dented arrivals in Bali in the first quarter of 2005, but only for a short period. "Things were absolutely flying, the hotel was not without a day under 90 percent occupancy, the island was buzzing," Burchett recalled about mid-2005.

"Then, boom! It was quite different to the first bombing, in that people didn't evacuate, and it was a lower death toll. But it meant that the bookings, which would have come in for the end-of-year, didn't. As guests left, they weren't replaced. Christmas and New Year was dire," he said. Now, eight months after the bombing, "it's filtering through the economy. People are not being laid off here yet, and I don't think they will be - I think we've turned the corner - but it's getting pretty tough out there," Burchett said.

Arrival statistics for the first quarter of 2006 were more than 25 percent lower than the same period in 2005. Tourism on Bali is driven by wholesalers; agents usually reserve large blocks of rooms during the two high seasons that run from April to July and from August through the end- of-year holidays. Since April, Burchett said, reservations have improved, with the Conrad occupancy rate reaching 40 to 50 percent.

But airlines are flying smaller planes to Bali, and schedules have been cut. Asians are traveling again, led by the Japanese and Korean markets, as are the Europeans. The black hole for the Balinese is the Australian market, usually the largest bloc of tourists and investors, which has been eroded further by a series of headlines about Australians imprisoned in Bali for drug trafficking.

While waiting for the tourists to return, investors, however, have not been idle. The budget market is oversupplied with rooms so the recent major investments have been in the luxury zone. The Conrad was the first major hotel to open in Bali in eight years, at a cost of $60 million, with a further $15 million set aside for a beachside wedding chapel, new club suites and spa villas, and a learning center dedicated to yoga and other natural healing disciplines.

Another new project just opened at Jimbaran Bay is the Kayumanis Private Estate. It offers 12 villas, each of about 500 square meters, or 5,400 square feet, with a private pool, private restaurant, lounge and kitchen, open-air bathrooms and 24-hour butler service - all next to a palm tree reserve. No pets or children are allowed. The villas are rented for $700 a night. "Once you're here, you don't have to think of anything," said Windu Subagyo, Kayumanis's sales manager.

The property was planned after the first, but before the second, bombing. "We can feel the occupancy is low for this area, but we see it is beginning to pick up," Subagyo said. No less expensive will be a stay at the Bulgari resort, under development on the Bukit Peninsula, which is being marketed as a combination of stunning cliff-top views and luxurious design.

Though set firmly in the tropics with the use of local material, towering roofs and stark granite walls are more cathedral-like than cozy. This joint effort between the luxury goods designer Bulgari and the Renaissance part of the Marriott hotel group will have 140 villas and is scheduled to open in October. Foreigners are not allowed to own property in Indonesia; officials have discussed changing the restriction, but it is not expected to be altered soon. In the meantime, it is common for an Indonesian to represent a foreigner or foreign company to complete purchases.

As the market improves, there are a lot of rumors - about the Melia Group planning something in Nusa Dua, the Marriott plotting a project in Sanur, of a St. Regis villa development and a Fullerton Hotel, perhaps in Nusa Dua. "Bali has long lived off word of mouth, and that's not enough any more," Burchett said.

Posted in Tourism @ 20 July 2006 15:21 CET by Jeroen · 'Blog' RSS feed · permalink

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