#TourismInsightsBali

[archbali]

Sustainable Tourism at Risk Amid Canggu’s Swift Expansion

Once a modest village, Canggu in Bali has transformed into the island's most fashionable travel spot. Initially a magnet for surfers and budget travelers, Canggu now buzzes with a variety of tourism ventures, from charming cafes to opulent hotels. With each passing day, new businesses emerge here.

Yet, this rapid development comes with challenges. The potential for an economic slump is a concern if this growth persists. The proliferation of lodging options, including numerous hotels, villas, and guesthouses, suggests a risk of market flooding. Johannes Weissenbaeck, CEO of the OXO hotel group, observes a significant increase in hotel room availability in Canggu, which could lead to a future excess.

Weissenbaeck points out, "Three years ago, Canggu had 3,800 hotel rooms. Today, it's about 5,200, and next year, it's projected to reach nearly 6,000. That's nearly double in 3-4 years, and it's bound to create problems."

An image of a contemporary, unoccupied hotel room is shown.

There's a clear necessity for strategic, long-range planning in the hospitality industry. While current occupancy levels are satisfactory, Weissenbaeck stresses the importance of forward-thinking to sustain tourist interest. This growth in tourism, especially post-pandemic, has sparked not only interest in temporary accommodations but also in more lasting property investments in Bali, particularly in Canggu.

Weissenbaeck has also noticed a notable trend. Even during the economic downturn caused by the pandemic, Bali's real estate market remained stable, a stark contrast to some Western markets. While tourists might initially benefit from an excess of hotel rooms, it could ultimately harm Bali's tourism industry in the long run.

Weissenbaeck comments, "The rise of remote work allows people to work from virtually anywhere, and Bali, with its lower living costs compared to other cities, is increasingly attractive. Feeder markets like Singapore are taking notice, and the conflict in Russia-Ukraine has also led to an increase in people relocating to Bali."

Tourists in Canggu currently have a vast selection of accommodations, but this could result in higher room rates as developers aim to recoup their investments. If these properties then struggle to keep high occupancy levels, they may have to lower prices to attract more tourists.

This scenario is garnering attention from Bali's tourism industry leaders. Among them is the former deputy governor and current head of the Bali Restaurant and Hotel Association, Cok Ace. He calls for meticulous spatial planning and thorough market analysis before greenlighting further development projects.

A crucial concern among these leaders is maintaining Balinese cultural and architectural traditions in new constructions. This is exemplified by sustainable, locally inspired establishments like Hotel Tugu, Belajar Bali Boutique Hotel & Retreat, and Serenity Eco Guesthouse & Yoga.