Aug. 10, 2011--JAKARTA -- As new hotels and additional rooms continue to be developed in various regions throughout the island, tourism executives are now worried that those new available rooms might bring more trouble than profit to the industry.

Bali Hotels Association (BHA) executive director Djinaldi Gosana said that the moratorium on new hotel development on the southern areas of Bali did little to stop investors who had acquired building licenses prior to the moratorium. Many are now adding new hotels and resorts -- and rooms.

Early this year, Bali governor Made Mangku Pastika issued a moratorium that put a halt on the development of new hotels in the southern regions of Bali following two different surveys that confirmed the number of available rooms had exceeded demand.

The policy also aimed at pushing the investors to move their project to the northern, eastern and western parts of Bali, thus, stimulating a more balanced distribution of wealth.

"The investors, who had acquired their permits before the issuance of the moratorium, went on with their projects, while several old hotels have also carried out renovation projects, which include adding more rooms to their establishments," he said, adding that such projects would add thousands of new rooms.

The new rooms, Gosana pointed out, would bring at least two problems to the resort island. The first one related to the ability of the island's already diminishing water and energy resources to sustain the rooms.

"Each new room will need a steady supply of water and electricity. It is common knowledge here that this island is struggling on these two issues," he said.

The second problem the additional rooms would bring, he pointed out, is a price war.

"If all hotels are targeting the same markets, then the possibility of a price war will be quite large," he said, adding that hotels needed to diversify their markets to prevent such a war.

"India, the Middle East and South America are several markets that have yet to be optimally explored in a way by the tourist industry here," he added.

Similar concerns on the island's carrying capacity and the possible price war were echoed by the Indonesian Hotel and Restaurants Association (PHRI) Bali chapter deputy head Ida Bagus Gede Sidharta Putra.

"Although the number of tourists continues to increase, the availability of more rooms would naturally reduce the hotel's occupancy rate, as well as the visitors' length of stay in a hotel," he cautioned.

Bali had around 2,175 hotels with 46,014 rooms in 2009. Sidharta Putra estimated that in 2011 the number of available rooms in Bali had reached 50,000.

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