Market Update March 2008
2007 was a growth year for
According to data from the Central Bureau of Statistics, the number of tourists arriving in Bali rose 21% (to 1.6 million out of a total of 3.36 million) from a total of 1.26 million arrivals to
For 2008, the Tourism Ministry is taking a more aggressive marketing position and increasing visibility and spending as well as launching ?Visit Indonesia Year 2008?. The official goal for visitors to
As the popularity of luxury villa accommodations continues to grow, the value of this distribution channel will also grow.
Most tourists coming to Bali already know the name
LIV is perfectly positioned in this area to capture that changing accommodation market. Third, as other villa developments open in
The Villa Industry and Pricing
However the luxury villa chains are a bit confined in the per room or per villa rates they can charge. They must price their villas in relation to the prices they charge for existing hotel rooms and that is determined by their world-wide pricing policies irregardless of what their operational costs are in
LIV, which has an outstanding location, extensive common facilities, top quality build and furnishings and possesses one of the only beach clubs outside of the Nusa Dua area, will be charging between 200-300USD per bedroom (rates vary across seasons and depend on the # of bedrooms within the villas).
We think the value proposition that LIV offers: private pools, newly constructed, well located, with extensive facilities will be very appealing to the market place and strong occupancy is expected.
A simple strategy for launching new products. We insist that whatever we consider the market value of a product we discount it by 30% the first year offering it as a special introductory rate to the market. Agents approach their clients offering them this special rate and it normally leads to a burst of occupancy. The operational side then swings into action ensuring that once guests, who have braved the concept of trying something new, arrive to find their expectations exceeded and return to their home countries telling their friends about the new offering
Once occupancy and word of mouth branding is established, then rates are raised to their market prices in the second year and thereafter will be as aggressive as possible with rates while always striving to be a little bit under what we think the market can bear rather than a little bit over.
We continue to see many clients embrace the whole concept of private spaces (one's own pool, the ability to have a dinner party, proper stereo/multi media systems, etc) and we should not be surprised, in this day and age when so many people travel and stay in luxury hotel rooms, a private villa is a fantastic change of pace and an increasingly sought after luxurious option.
Bali's strong sales performance over the last year, combined with a very healthy rental market and an increase in tourist arrivals, leads us to be optimistic about rental prospects for LIV Bali. We feel that the forecasts made remain conservative and attainable, absent a dramatic shift in market conditions. Moreover, the strong demand for villa accommodations, (particularly high-end accommodations) and the increased attractiveness of the
LIV Bali pre-opening marketing will seek to build excitement about both the destination and LIV itself. The product will be taken to both the wholesale (i.e., travel agent) and retail (i.e., direct client) markets. It is expected that response will be quite positive as LIV brings to market a unique facility in a popular location.
Our best estimate is that the demand for villas will continue to increase by at least 20% a year for the next few years. Increasingly travel publications continue to showcase villas as a new and exciting holiday option. In the last 12 months Bali villas have appeared in DestinAsian Magazine (getting 2 of the top 10 villas in Asia), Condé Naste Traveller, and front page of the New York Times travel section (among many articles in numerous publications.).