Sustainable Tourism at Risk Amid Canggu’s Swift Expansion
Canggu, a former quaint village in Bali, has become Bali’s trendiest travel destination. Originally attracting surfers and backpackers, this area has seen a rapid growth in tourism-related businesses, ranging from quaint coffee shops to luxury hotels. Every day, it seems, a new enterprise is launched in Canggu.
However, this swift expansion has its drawbacks. The risk of an economic downturn looms if growth continues at this pace. The burgeoning number of accommodations, including hotels, villas, and guesthouses, hints at a potential market oversaturation. Johannes Weissenbaeck, CEO of OXO hotel group, notes that Canggu’s hotel room availability has surged, raising concerns about future oversupply.
“In Canggu three years ago, there were 3,800 rooms available; now, there are around 5,200 rooms. Next year, it will be almost 6,000, meaning it will double. In 3-4 years, that will definitely be an issue,” Weissenbaeck said.
The need for long-term planning
While acknowledging the healthy current occupancy rates, Weissenbaeck emphasizes the need for long-term planning among accommodation providers to maintain the tourist influx. This has sparked interest not just in temporary stays but also in more permanent investments like buying villas in Bali, especially in areas like Canggu. The recent boom in Canggu’s tourism, fueled by the pandemic’s aftermath, is attracting digital nomads and international tourists.
Weissenbaeck also observed an interesting trend: even during the pandemic’s economic downturn, Bali’s property market remained robust, unlike some Western markets. While the short-term effects of an oversupply of hotel rooms may benefit tourists, it poses a long-term risk to Bali’s tourism sector.
“Many people work remotely; they can work from anywhere, especially since the cost of living is cheaper compared to other cities in the world,” said Weissenbaeck. “So many feeder markets, such as Singapore, are coming to Bali. Plus, the conflict in Russia-Ukraine is making them move to Bali.”
Tourists currently enjoy a wide array of accommodation choices in Canggu, but this could lead to increased room rates as developers seek to recover costs. Eventually, if these properties struggle to maintain occupancy, prices may decrease to attract more visitors.
This situation has drawn the attention of Bali’s tourism industry leaders, including the former deputy governor and current chairman of the Bali Restaurant and Hotel Association, Cok Ace. He advocates for careful spatial planning and market demand analysis before approving more development projects.
A key concern is the preservation of Balinese cultural and architectural heritage in new developments, as exemplified by sustainable, locally inspired hotels like Hotel Tugu, Belajar Bali Boutique Hotel & Retreat, and Serenity Eco Guesthouse & Yoga.
