Why Bali Could Be Airbnb’s Most Lucrative Market?
Photo by Ern Gan on Unsplash
Bali, the idyllic tropical haven nestled within the Indonesian archipelago, has traditionally been a favored choice for tourists in pursuit of sunshine, sandy shores, and tranquil getaways.
Nonetheless, in recent times, there has been a notable upswing in the demand for luxury villa rentals on the island, with an increasing number of travelers preferring the seclusion and exclusivity offered by villas over conventional hotel or resort accommodations.
This island has been experiencing a remarkable surge in the popularity of luxury villas. In recent years, this tropical paradise has witnessed a transformative shift in its hospitality landscape, with an increasing number of travelers seeking the epitome of indulgence and privacy that only luxury villas can provide.
As of July 3, 2023, according to the most recent data released by the Bali Central Bureau of Statistics, there was a remarkable influx of 439,475 foreign tourists visiting Bali during that specific month.
As the demand for opulent, exclusive getaways continues to rise, Bali has firmly established itself as a global hub for luxury villa experiences, redefining the way discerning travelers explore and savor this picturesque destination.
Photo by Sara Dubler on Unsplash
Increasing Demand for Luxury Villa Rentals in Bali
People increasingly favor villas over hotels in Bali due to the allure of privacy, exclusivity, and personalized experiences which could make it a lucrative investment opportunity. Bali's luxury villas offer guests the opportunity to bask in seclusion, away from the crowds, and savor the island's beauty in their own private sanctuary. The provision of dedicated staff, from private chefs to butlers, ensures an impeccable and customized stay, while the spacious interiors and outdoor areas cater to families and groups seeking comfort and relaxation.
Villas often blend seamlessly with Bali's rich cultural heritage, offering an immersive, homely atmosphere with traditional architecture and decor. This shift in preference reflects a desire for a more intimate, flexible, and culturally immersive vacation, epitomizing the essence of the Balinese experience.
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Rise of Online Booking Platforms
The surge in demand for luxury villa rentals in Bali has been significantly influenced by the emergence of online booking platforms like Airbnb and Booking.com. These digital platforms have simplified the process of discovering and reserving luxury villas for travelers. Moreover, they provide a comprehensive array of review and rating mechanisms that empower travelers to make well-informed decisions regarding their accommodation selections.
Furthermore, these online booking platforms enable villa proprietors to effortlessly promote their properties to a worldwide clientele, thereby extending the scope and exposure of their offerings. As mentioned above, Airbnb villas often provide a unique experience that a normal hotel or resort is unable to match which makes this an extremely lucrative market.
Number of vacation rental users in Indonesia from 2017 to 2027(in millions).
Source: Statista
The 'Vacation Rentals' segment of Indonesia's travel and tourism market is projected to experience consistent growth from 2023 to 2027, with an estimated increase of 1.2 million users, representing a substantial growth rate of approximately 10.06 percent. This positive trend, spanning seven consecutive years, is expected to culminate in 2027, when it is estimated that the indicator will reach an impressive 13.09 million users, marking a new peak in this sector, clearly showing the demand.
The Supply of Luxury Villas Has Increased Significantly
When there is a demand, the supply naturally increases. The proliferation of upscale villas in Bali witnessed a significant upswing in recent years, especially after the pandemic, where people have the opportunity to work from anywhere in the world. There is no lack of options, especially in sought-after tourist hubs such as Seminyak and Canggu. According to statistics compiled by AirDNA, a firm specializing in vacation rental data analysis, between the years of 2018 - 2019, there was a 20% growth of villas available to rent.
These villas encompass a wide spectrum in terms of size and amenities, catering to a varied clientele. Some, such as Vox Villas offer artistic and timeless design with features like sunken pools, high ceilings, and a rooftop garden, while others adopt a more modest and tranquil approach.
Conversely, there are also cozy private villas such as The Carter boasting just a handful of bedrooms and essential amenities like a swimming pool and an outdoor kitchen. This rich tapestry of luxury villa options in Bali ensures that there's an ideal fit for every type of traveler, whether one seeks a sizable all-inclusive villa resort or a cozy, secluded retreat.
The array of choices has contributed to the burgeoning popularity of luxury villa rentals in Bali, as travelers now enjoy an unprecedented range of alternatives when seeking the perfect accommodation to suit their preferences and needs.
Source: AirDNA
As seen above in a market overview of Bali, it is doing extremely well and this is of no surprise due to the factors mentioned above. The annual revenue (USD$47,679.73) and occupancy rates are no doubt growing steadily.
Prices and Competition
The pricing structure of luxury villas in Bali exhibits considerable variability, contingent upon factors like the property's location, dimensions, and featured amenities.
Based on data provided by AirDNA, the average daily rate for luxury villas in Bali hovers around USD$230, encompassing a wide spectrum. Rates can start as low as USD$100 per night for smaller, more modest villas and escalate to surpass USD$1,000 per night for expansive, top-tier villa accommodations.
Unsurprisingly, prices tend to be elevated in highly frequented tourist destinations such as Seminyak and Canggu, where demand for rental properties is robust, engendering heightened competition among potential renters. Conversely, in more secluded and less traveled locales, pricing may be more economical due to diminished demand and decreased competition in the market.
Source: AirDNA
As seen from the chart above which reflects 2023 data, the Average Daily Rate (USD$214.79) has been slowly creeping up, meaning that hosts are slowly but surely increasing their daily rates. Compared to last year, there has been an 8% increase in this rate. Despite this, the occupancy rate has also increased compared to last year as reflected in the data below.
Source: AirDNA
The luxury villa rental market in Bali is fiercely competitive, offering travelers an extensive array of choices.
Year after year, a steady influx of new villas enters the market. Consequently, it becomes imperative for villa proprietors to distinguish their properties and provide an elevated standard of customer service as a means of setting themselves apart within this competitive landscape.
All these factors tend to add up, increasing the costs for those looking to stay in Bali long-term. Prices are constantly increasing as there is no shortage of demand and supply. Here at Eden Homes, we have the perfect solution for you. If you’re looking for a second home, you can own a share of your very own property at a fraction of the cost and likely to be cheaper than renting a villa long term. Additionally, Eden Homes offers fractional ownership with the potential of rental yield* for some properties.
Our innovative co-ownership model allows you to enjoy luxurious and exceptional properties in sought-after locations such as Bali at a fraction of the cost, making your dream a reality.
We focus on luxury, high-end properties that are professionally managed and fully furnished. No matter your preference, whether that might be a massive villa with all the amenities you could want or a smaller, private serviced residence such as Vox Villas, Eden will have something for you.
