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Bali has been on the mainstream tourism scene for a long time. Bali veterans have witnessed first-hand the development in Bali over the decades, and one thing has been a constant, it's not getting any cheaper!
In this months stream of consciousness, we have a look at the growth of tourism in the region, and discuss some of the underlying reasons why Bali is no longer the "dirt cheap" holiday destination that it once was. Before we get into it, let's just start by saying, it's not all bad news. Bali is still significantly cheaper than most popular holidays destinations around the world, and almost certainly a lot less expensive than holidaying domestically if you live in a developed western country. International holiday-makers who travel to our properties (both in Bali or Nusa Lembongan) tend to say the overall costs of accommodation and food (the two biggest expenses for most travellers) is significantly cheaper than their home country for a like-for-like experience i.e. eating and drinking the same quality of food and beverage, and staying in the same or similar standard of accommodation.
You tend to get a lot more bang-for-your-buck overall.
As Australian's, when explaining the price of things in Bali to friends, we often would articulate it that you can dine at stunning beach front venue on Nusa Lembongan such as Ohana's, or top quality restaurant in Bali (as good as anything you'd find back home), for probably the same cost as dining at a mid-range, run of the mill, suburban pub, surf-club or RSL. To offer up a real world example, let's take a look at an item from the menu at Ohana's beach club - call a spade, a spade; one of the most popular, desirable and beautiful venues on Nusa Lembongan - on the absolute beach front in the heart of the main town.
Our menu was designed and implemented by an acclaimed chef from Byron Bay in Australia, and we regularly have consultants from some fantastic restaurants in Bali or Australia come and add new dishes. The San Choy Bow (pictured bottom left) which is one of our signature dishes for sharing will set you back AUD $10.40 including tax and service. We like to eat out as much as the next person when we're in Australia, we generally travel a lot when we're in Australia catching up with friends. A similar dish in a less desirable location in Australia, would likely set you back at least $15-$20, and if you're in any of the trendy or more affluent areas, you'll be looking at $20+ in a nicer or more vogue venue. So you probably reason that Bali is in the range of 50-70% of the price for like-for-like. Even at the most expensive restaurants in Bali, we generally notice that whilst the bills add up, they're probably 70% of the better restaurants in Australia.
Equally, you can stay in a room at a high quality beach front resort in Bali for significantly less than staying in a comparable property and location in a popular tourist destination in Australia. We'll offer some specific examples further on. So whilst the cost of an Indonesian holiday has certainly increased, it still represents very good value when compared with holidaying in many other places in the world. Regardless, over the years, it is fair to say that a Bali holiday has become more expensive than it once was, so let's have a look more closely at some of the drivers behind why that Indonesian holiday is not as "cheap" as it once was...
REASON #1 - The growth in popularity and demand to visit the Island of the Gods The Island of the Gods was put on the global tourism map in the 1960's mostly by hard-core surfers. These pioneers of Bali "tourism" forged the path for mainstream tourism, however initially stayed in very basic accommodation and had very few choices in cuisine.
Once the doors for tourism were opened there was no stopping Bali, and in just a short couple of decades the Island of the Gods had become one of the most visited and in demand holiday destinations in all of Asia (and even the globe). By the 1980's a "Bali Holiday" was fast becoming a staple diet for the average Australian chasing a tropical escape. And by the 1990's, the once a year migration to Bali for many Australians, had pretty much became a birth right.
Fast forward another 30 years to the 2020's and Bali has continued on the same trajectory, though on an even more global scale, and winning pretty much every award there is in the book when it comes to tourism destinations along the way. As recently as 2021, amid the Coronavirus pandemic, Bali was ranked #1 winner of the TripAdvisor Travellers Choice Awards - making it TripAdvisors #1 travel destination world-wide!
Today, Bali is unquestionably on the global map, and is one of the world's premier and most in demand tourist destinations. Without saying too much more, being centre-stage on the global tourism map as a top destination, is first obvious reason why Bali has become more expensive over the years.
As things become more popular (in demand), they tend to become more expensive. Pretty simple. But that doesn't necessarily mean the operators have been making more money or are price gouging... Read on, as the story is a bit more complicated than first meets the eye.
REASON #2 - Inflation and the increased cost of business
This is kind of the boring bit... but it certainly fleshes out the picture as to why prices have been going up in Indonesia. Indonesia is considered to be a "developing" nation, and like many developing nations, it's inflation has typically outpaced that of many of its developed western counterparts - where many tourists to Bali come from. This has been a long term trend for decades, causing the cost of living and operating in Indonesia to increase (or rather, just play catch up to other parts of the world). Over a year or two, these price increases may not be all that noticeable to Bali regulars, though when extrapolated over 5-years or longer, the difference is noticeable.
We've seen this first hand in our experiences. Our family has been travelling to Bali since the 1970's - first of all on surfing missions, then family holidays, and more recently as business owners. Over the years, every time we have returned to Bali after spending time away from the island, the island got a little bit more developed, and the prices of things went up. These days in premium locations in Bali or Nusa Lembongan, with inflation and so much international demand for property, it is expensive to buy or build quality properties in premium locations.
This progression has left many early Bali travellers in the "salty camp" resenting the change over the years, but for us progress is a part of life, and whilst Bali is different today to what it was in the 70's, 80's or 90's, it certainly is no less enjoyable. Sure it is busier today than in days gone by, though there are still plenty of quiet places to enjoy, and today there is a lot more choice and diversity in offerings and experiences. We love the fact that modern day Bali means we can be as rustic and involved in the local experience as we want, and eat a meal of ayum goreng lalapan (shallow fried chicken) or nasi bungkus (takeaway rice dish often with an assortment of noodles and mixed vegetables) off a street cart for $1-$2, or enjoy dining at any of the hundreds of world-class restaurants with cuisines from all over the world, all within a few hundreds metres (at most). You can truly have it all these days in Bali.
It's no doubt also overlooked by some of the simpletons amongst us, that whilst prices in Indonesia have gone up over time, so have prices in the rest of the world. So the "real" cost difference may not be as great as it seems. A taxi that might have once costed Rp 10,000 rupiah ($1), might now cost Rp 30,000 ($3), but to be fair I recently noticed that the price of the famous "30 cent cone" from McDonalds that we all enjoyed in the 1990's in Australia is currently being promoted on TV for $1 as being a bargain. So go figure... If we look at one particular aspect of inflation, being the wages component, it has had a large impact on operators needing to pass on increased overheads. For many tourism (service) orientated businesses, wages are one of the largest expenses. In Indonesia, there has been a huge push for increased employment conditions and living standards. Minimum wages in Indonesia are mandated by the central government. In the last decade, wages have more than doubled under these mandates. It was the same the decade before that, and the decade before that. Wage increases in Indonesia have outpaced headline inflation in the country. Since the 1980's, wages have increased 1600% due to the compounding effect of year-on-year mandated wage increases!
In 2020, the minimum wage increased by 8.51% whereas the national inflation rate was only 2.03%, leading to approximately 6.5% compression on margins, without considering any increases in prices required to counter-act inflation. Any business that is not adjusting to these increased costs of business is not simply not going to survive, so ultimately these costs get passed on to consumer, or the business won't be around tomorrow.
REASON #3 - No-one really liked bed-bugs and not having air-conditioning, let's be honest...
Coinciding with the growth in tourism, has also been a demand for a broader array of options and more sophisticated offerings. Going back to the 1960's and 1970's, Bali was almost exclusive for the hard-core surfers, typically a bunch of "blokes", who from time-to-time would reluctantly have the "Mrs" in tow. For the most part, they were going to do one thing... Surf. Tourism was in its infancy, the food was basic, and the accommodation was simple.
Today Bali is a cultural and culinary mecca, for families, couples, honeymooners, grey nomads, back-and everything in-between. Sure the surfing is still a major drawcard, but most people who go to Bali for holidays, don't go there to surf, and there is so much more on offer to do in Bali today than there was 20, 30 or 40 years ago. Going hand-in-hand with this expanded clientele, has been more sophisticated offerings and more choice. No longer is the only option a leaking thatched hut, with rickety fan (no air-conditioning), a mosquito net if you're lucky, and a staple diet of nothing but Bintang and mie goreng for every meal on the two week annual migration to Bali. Today, there is still the sh*thouse, if that's what you want, but also the penthouse, the villa, the family room, and pretty much every other style of accommodation you can think of!
Now, before the salty sea dogs reading this start muttering under their breathe "oh, but it was so much better when it was basic"... The old "back-in-my-day" type. Sure, Bali has changed, though you can certainly still find that style of accommodation if that's what you're after. More often than not, we hear this sort of comment from the crew who for some reason feel as though they have more entitlement to the Island of the Gods, because they "went there first", as though this is some sort of rationale to having more of a right to dictate what Bali should be, whilst actually have no desire to ever pursue these very basic travels in any-case given they now have alternatives which deep down they prefer.
Regardless of opinion on whether Bali was better or not in its yesteryear, it's very fair to say, that not only have prices increased, but so have peoples expectations on offerings have also increased, and the choices have become more sophisticated. The reason there are hundreds, if not thousands, of world-class restaurants in Bali and high-end hotels and villas with all of the latest modern luxuries, is not so they can sit empty... It's because it's been built in response to demand and voice from travellers as Bali has developed beyond only being a destination for the hard-core penny-pinching surfing enthusiast. But hey, if sleeping on a bed-bug ridden lop-sided mattress, complemented by the balmy ambience that only a rickety rust-bucket of a fan can provide, whilst digesting the 8th serve of bakso balls you've eaten in the last 72 hours is your cup of tea, then there is still no shortage of opportunity to pursue that experience on a shoe-string budget. Trust us, no-one is taking that experience away from you any time soon...
The bottom line
So what does this all mean for my next Bali holiday? Is the Island of the Gods, now exclusively the Island of the rich and famous? The answer is pretty straight forward. Today the Bali offering is more broad than ever and there is something for everyone, people on all budgets, from all warps of life, and of all interests. Just don't be under the false pretence, that you can enjoy a champagne lifestyle on a beer budget. What you can expect, is that that if you are from a developed western country, then you will get more bang-for-your buck whilst holidaying in Indonesia.
If you want to stay in decent quality places, and dine in the better quality venues, then you can do so for significantly less than you would be able to do that back home. As we put it using an Australian example, you can eat at top quality restaurants, and world class beach-front venues, for what would be considered very average pub or surf-club prices in Australia.
Likewise, when it comes to accommodation, you're going to get a better quality room, in a better comparable location, for considerably less then you'd expect to pay for that same room or location back home.
Of course if you want to really want to earn your right of passage and test your metal, then the choice is still there to stay in very basic accommodation for as little as $15-$30 per night (probably even less), but don't be fooled into believing you'll be staying at the Ritz Carlton or in the most premium locations for this sort of money. Similarly, if you want to eat simple food as the locals do, you can do so for $1-$2 per meal. It all comes down to what you are looking for in your next holiday experience.