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The Government of Bali Plans to Standardize Room Rates

News The governor of Bali, Made Mangku Pastika, has made quite an interesting announcement. The government of the island wants to standardize room rates in local hotels. This is how local authorities want to stop the price war that has been started to prevent the building of new hotels on a popular island.

Such a decision was made on the basis of the data provided by the Association of Indonesian Hotels and Restaurants (PHRI). According to their data, currently the total number of hotel rooms in Bali has exceeded 75,000. This is more than the demand for hotel rooms on the island, so there’s no wonder why hotel rates fall down. In March average hotel rates in Bali were more than 30% below the average room rates in 2012.

The new policy about the standardization of room rates is likely to be imposed because the government wants to make sure that the tax is paid in full. If hotels lower their prices because of extra supply, and a room in a 5-star hotel will cost, for example, US$70 instead of US$250, the government will receive less money. Therefore, for the local government it is more profitable to stop uncontrolled hotel development and set up room rate limits.

Currently, the government plans to establish 6 hotel groups with different rates – jasmine, star one, two, three, four, and five. The proposal is ready and is awaiting the approval of the authorities. As the government has the right to lower the category of hotels, they threaten hotel owners that they will downgrade the category of hotels that offer their rooms too cheap.


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