Condotels thrive as southern Bali faces gridlock

Lucrative investments in condominium hotels, more popularly known as “condotels”, are driving more tourism businesses to develop such properties all over the southern region of Bali.

“Nowadays, almost 90 percent of hotel businesses are turning to a condotel-based system. We have been running our condotel for the past 2.5 years, and it’s thriving so fast that none of the owners are willing to sell their units,” the general manager of the 265-unit New Kuta Condotel, Achil Hermanto, told The Jakarta Post on Tuesday.

Every day, a new hotel appears in one of the island’s well known leisure destinations, such as the Kuta or Jimbaran beaches.

Achil pointed out that in Bali, the unit price of condominiums with hotel-like services had escalated by over 50 percent, from an indent price worth Rp 250 million to currently worth over Rp 450 million.

“And that’s only how much they are worth in Jimbaran. In Kuta they can be even higher, because the land value is much higher.”

“Condotels give their owners a sense of security to invest in Bali because they [the operators] have to maintain and run their units [for short-term rents] and they get annual shares that are worth more than a bank deposit account,” said Achil.

He emphasized that condotels were lucrative for both the developer-operator and the owners, which he claimed consisted of 75 percent of businesspeople from Jakarta, Surabaya and Bali plus 25 percent of foreign businesspeople.

Achil’s business group plans to expand by opening four more new condotels, which include villas, in the Jimbaran area, where there are 12 ongoing hotel projects.  

His is not the only one expanding. The Swiss-Belhotel International, which manages two condotels with 335 rooms, also plans to open another 150-room condotel on Sunset road, this year.

According to data from the Badung  tourism agency, since condominiums with hotel-like services began operating in 2009 there were currently 14 condotels with a total of 1,700 room units in Badung, mostly concentrated in the Kuta area, which is already home to 98 classified starred hotels and over 700 villas, budget hotels, guest houses and the like.  

Last year, Bali welcomed an overall 2.75 million foreign tourists from Australia, China, Japan and Europe, plus domestic visitors, which may have been double the number of foreign visitors.

To some extent, the rocketing development of these condotels is worrisome for local tourism, with increasing problems of inadequate public infrastructure, uneven development and the issue of accommodation oversupply.

Bagus Sudibya, a local tourism tycoon, who believes that most if not all the investors in the condotels are foreign or non Balinese, told the Post: “When inviting investors to invest in such huge accommodation businesses, the administration also needs to think of public infrastructure.

“We are now already heading toward stagnation. Just look at the lack of parking areas, the lack of clean water, the escalating frequency of traffic jams. We can now be stuck in traffic for an hour from Kuta to [Ngurah Rai International] Airport, which used to be only 10-minute drive away,” said Bagus, adding that development should
not be concentrated only on southern Bali.