The future of Bali – What lies ahead for Bali island…
How long will Bali need to again welcome around 17 million annual visitors – a number comprised of about 6.3 million foreign visitors and some 10.7 domestic travelers? And, perhaps more to the point, when will Bali once again enjoy the more than US$10.7 billion in revenues spent by past visitors, both foreign and domestic, at the Island’s hotels, restaurants, shops, and tourist attractions?
And, of equal concern, will Bali ever fully recoup those halcyon days when the local economy provided direct and indirect employment for well over one million of the more than 4.2 million people who make their home on the Island?
The impact of the ongoing global pandemic on the world’s economy has been both wide-ranging and profound. The world now finds itself confronting a “new normal” in which the very nature of global travel has altered. These changes, in turn, will dictate the future face of Bali as an international travel destination.
In calculating the future of Bali tourism, consider the following:
- World aviation is fundamentally changed. In Indonesia, the major air carriers are hemorrhaging cash and living under mountains of debt. Once large and respected international names in aviation are now on their knees. Airlines have been forced to mothball armadas of parked aircraft, closed international sales offices, retrenched staff, canceled new aircraft orders, and trimmed their wings in anticipation of shrinking from their former status as a global airline to just a regional air carrier. Grim proof that the appetite for bigger, better, and higher is no longer fashionable in aviation circles is found in the fact that the two behemoths of modern aviation – the Boeing 747 and Airbus A-380 – have recently ended their production runs.
- In a matter of only a few months, the world has been plunged into the worst recession since the Great Depression – far worse than the Global Financial Crisis. While the losses are ongoing and still being calculated, global economic growth in 2020 will fall to at least minus 3 percent. Industries, brands, and business franchises have suddenly disappeared and, with them, countless jobs. Unemployment, a decline in disposable income, and economic uncertainty seem certain to deter travel for the foreseeable future.
- We are in a world pandemic. Each country will devise its response to COVID-19, depending on the course the disease takes in each locale. Bali is doing a laudatory job in preparing to welcome back tourists safely. But, when tourists from key source markets will return remains out of the Island’s hands and depends mostly on when borders reopen internationally and in the region. As we write this, U.S. nationals are unwelcome in most European countries, and the world is warned not to expect Australian travelers to be making any overseas trips until sometime in 2021. That the borders of many nations remain closed to international travel and compel a mandatory quarantine period for foreign visitors, and returning expatriates alike, make international travel highly unattractive in the present circumstance. With Chinese and Australian travelers once the main source of Bali foreign visitors and now limited in their options to travel by government decree, we ask where will Bali find the tourists it needs to fill its hotels and restart its travel industry?
- COVID-19 is not going away anytime soon. HIV was first identified in 1981, and while highly effective life-sustaining treatments are now available, some 40 years later no cure is in hand. Even if a vaccine effective in fighting COVID-19 is discovered, medical trials, distribution of the vaccine, and overcoming medical prejudices mean that the world will be wearing face masks and practicing social distancing for years to come. The lasting social and economic impact of COVID-19 on the hospitality, cruise, and airline industries are only slowly starting to become known.
- Indeed, the very nature of the travel industry has changed. Higher airfares, reduced flight frequencies, and physical distancing protocols will translate into travel that is suddenly more expensive, and, as such, has become basically inimical to “mass travel.” The momentary or long-term disappearance of major sporting events, festivals, concerts, and international conferences will also have powerful lead-on impacts on airlines, hotels, and conference venues together with a whole range of supporting businesses.
The future of Bali – So what Lies Ahead for Bali?
Given the numerous detrimental impacts of a pandemic-ridden world on travel in the “new normal,” it is both naive and more than a little pollyannish to assume that Bali tourist arrivals numbers will return to their former pre-pandemic levels any time soon.
The more likely scenario, in our view, is to plan for a return of visitors to Bali at around half the level experienced before the COVID-19 pandemic.
An Inevitable Price War Looms
If, as we suspect, Bali tourism returns at a fraction of its former self, an Island already oversupplied with hotel rooms before the global pandemic will be even more so in the months ahead. Desperate for cash, hotels will engage in an unprecedented price war that will, over time, make Bali a cheap destination over-supplied with rooms that are spiraling into dilapidation due to neglect and the lack of funds to maintain and refurbish room inventories.
The future of Bali – What Can Be Done?
Bali desperately needs a new paradigm to address the lack of tourist visitors, the surfeit of hotel rooms, and an acute need for capital to drive its economy.