Bali Hotel Operators Warn Rising Fuel Costs May Impact Travel Sector

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Hotel operators across Bali have expressed their fears that the rising fuel costs will have a knock-on effect on the near-recovered tourism sector. The Bali Tourism Association has spoken to the press to explain the impact rising fuel costs are projected to have on the travel industry on the holiday resort island. 

The Deputy Chairperson of the Association of the Indonesian Tours and Travel Agencies, Budijanto Ardiansjah, spoke to press reporters earlier in the week. He explained that fuel price increases will affect tourism and the transportation sector on the island. Leading to potentially increased costs of goods, as well as experiences. Ardiansjah suggested that lower to middle income travelers would first feel the impact.

He explained ‘my prediction is that in three months until the end of the year, domestic travel will decrease somewhat’. That being said, he did acknowledge that travel rates tend to increase towards the end of the year around Christmas and New Year. 

Ardiansjah suggested how he felt the government could support the fuel crisis. ‘What the government can do is provide subsidies in other fields, for example…there was BLT [direct cash assistance], to reach the lower class, whose economy has declined due to the increase in fuel prices. 

As for the domestic and international tourism sector, Ardiansjah suggested that package deals may help keep costs low and make travel a practical and affordable option for all travelers. He suggested that the government may also be able to subside some package flight and hotel travel deals. An idea that was also tabled a few weeks ago by the Deputy Governor of Bali, Cok Ace. He called upon the central government to subsidize flights to Bali to help incentivize international travelers.

Ardiansjah said, ‘Regarding tourism, the government can also provide subsidies in the form of package bundling. In the past, yes, yes, so each package was subsidized by 20 percent or Rp. 1 million, a maximum of Rp. 5 million, now it can be done again’. He went on to echo the sentiments of Deputy Governor Cok Ace by suggesting that the central Indonesian government subsides airfares and hotels to cover the difference in price caused by changing energy tariffs.

Other tourism leaders have chimed in on the conversation. The Secretary of the Hotel and Restaurant Association in Badung, I Gede Sukarta, suggested that hotel operators are reluctant to increase room rates just as mass tourism is about to find its feet again.

He said, ‘In the condition of Bali’s tourism which has not fully recovered, hotel people find it difficult to think about raising room prices. What we hope is that there will be more and more guests’. Sukarta also confirmed that the rising fuel costs would impact the transportation sector and, in turn, the costs of goods offered at hotels, including food.

Bali’s most frequent international travelers, from Australia, the USA, the UK, India, Singapore, and Malaysia, are all facing rising fuel prices at home too. Rising fuel rates in Indonesia are pushing the margins of travel exepriences which will impact travelers’ overall budgets. For example, travelers jumping on the fast boat from Bali to Nusa Penida must pay an additional IDR 20,000 (USD 1.34) for the journey.

These increases may seem small and incremental when viewed in isolation, but when observed as part of a bigger travel budget can add up to a significant sum. There are fears amongst the Bali tourism sector that fuel costs will hinder the exceptional progress made by the island in its recovery from the pandemic. 

As announced by the Indonesian Minister for Tourism and Creative Economies, Sandiaga Uno, and Bali Governor Wayan Koster this week, the Island of the Gods is on track to hit tourism targets by the end of the year.

While hotel operators’ concerns are valid, and increasing fuel costs will undoubtedly have to be reflected across the tourism supply chain, the data suggests that Bali’s tourism economy remains on a one-way path to pre-pandemic levels.