in focus: lombokgili islands – the famous gili islands, which consist of gili trawangan, gili air...

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IN FOCUS:

LOMBOK

15 NOVEMBER 2013 | US$750

Peh Jun Ren

Valuation & Consultancy Executive

Muhammad al Ayyubi

Sales and Marketing, Conference

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IN FOCUS: – LOMBOK | PAGE 2

Lombok

Whilst the tourism sector in Indonesia is continuing to expand at a rapid pace in many parts

of the country, the island of Lombok has traditionally seen less growth and development

activity, until recently. The charming island is seeing increasingly strong interest from

developers and investors, and tourist arrival numbers, as well as hotel performance, is on

the up.

What is driving this growth? Where are the opportunities for resort development?

Overview

Lombok is one of the two main islands that make up the West Nusa Tenggara province of Indonesia. It is part of the chain of the Lesser Sunda Islands, separated from Bali to the west by the Lombok Strait and Sumbawa, the other main island in West Nusa Tenggara, to the east by the Alas Strait. The whole of Lombok measures approximately 4,739 square kilometres. With a population of about 3.2 million, Lombok is the 7th most populous island in Indonesia. The island is divided into four regencies: West Lombok, North Lombok, Central Lombok and East Lombok.

MAP OF LOMBOK

Strategically located near major tourism destinations such as Bali, Lombok is a tourism destination in the making. Lombok possesses a wealth of attractive characteristics that are favourable for the development of tourism.

For instance, the island’s distinctive cultural mosaic, which is a blend of the main Sasak culture alongside Balinese, Javanese and other minority cultures, positions the destination as a miniature Indonesian archipelago where tourists can experience multiple cultures that are unique to the country. In addition, the island’s beautiful natural landscapes, especially the famous Mount Rinjani and its long stretches of pristine beaches, are major tourist attractions.


Furthermore, the island’s stunning natural features draw tourists for activities such as diving, rafting, climbing and caving.

Lombok’s major tourism centres are highlighted in the following paragraphs:

Mataram – Mataram is the largest city in Lombok and the capital of the West Nusa Tenggara province. The city is situated within the West Lombok Regency and lies on the western side of the island. It measures around 61 square kilometres and has a population of approximately 413,000 inhabitants. There are three main districts within the city: Ampenan (to the west), Mataram (centre) and Cakranegara (to the east). Ampenan is located closest to the coastal areas and is home to the now-defunct Selaparang Airport. Mataram is the administrative centre where government departments, offices, educational institutions and other important services are concentrated. Cakranegara is the major commercial centre where Mataram Mall, the only shopping mall on the island, and other shopping facilities are located.

Senggigi – The Senggigi region is the main tourist strip in Lombok that stretches out over several kilometres along the west coast. It is located within the West Lombok Regency and lies just north of the capital Mataram. The whole area is interspersed with pockets of tourism developments and stretches of open undeveloped land, and is served by a two-lane coastal road that runs through three main districts: Batu Bolong (to the south), Senggigi (centre) and Mangsit (to the north). Batu Bolong is the gateway to Senggigi and has a wide range of hotels, restaurants and nightlife establishments. The central Senggigi area is a hive of activity and has a concentration of relatively large-scale four- and five-star hotels such as Santosa Villas & Resort and Sheraton Senggigi. Mangsit is generally less developed, but has several well-established hotels that are located along the long stretches of tranquil beaches. On the whole, the focus of Batu Bolong and Mangsit is more on the beachfront hotels whereas the central Senggigi area has an additional element of vibrancy and street feel. Despite the rapid growth of other tourist destinations in Lombok in recent years, Senggigi still remains as a popular port of call, especially among international tourists.

Tanjung – Tanjung is a developing tourist destination in Lombok and the administrative capital of the new North Lombok Regency. It is located on the northwest coast of the island and is accessible via a long winding two-lane coastal road that circumnavigates the entire north region. It also lies at the foot of Mount Rinjani, the third highest mountain in Indonesia and one of the most popular trekking destinations in Southeast Asia. The area and the two nearby peninsulas, Medana and Sire, are home to some of Lombok’s luxury resorts such as The Oberoi Lombok and Hotel Tugu Lombok.

Kuta – Kuta is a coastal town in the south of Lombok and a tourism hotspot. It is located within the Central Lombok Regency and lies on the south coast of the island. With the opening of the new Lombok International Airport near Praya, Kuta is now a convenient 30-minute drive from the airport.

While Kuta has a wide variety of accommodations and restaurants that cater to tourists, ranging from the four-star Novotel Lombok to backpacker lodges, the area has retained most of its natural, laid back character.

Gili Islands – The famous Gili Islands, which consist of Gili Trawangan, Gili Air and Gili Meno, are among the most popular tourist destinations in Lombok. The islands are located just off the northwest tip of Lombok Island. Out of the three islands, Gili Trawangan is the largest and the most visited. The island is also home to a variety of accommodations and restaurants, including luxury hotels such as Villa Ombak and Queen Villa. While there has been increasing development and influx of tourists over the years, the focal activities on Gili Islands remain the


same as tourists continue to visit the three islands for the purpose of diving, snorkelling and partying.

Infrastructure

As Lombok is primarily a tourism destination, developed infrastructure is mostly concentrated in the major tourism centres such as Senggigi, as well as the city area. However, the past few years have witnessed improvements in infrastructure across the island. This is largely due to the overall growth of Lombok as a destination and the investment from the provincial government.

Road – Major improvements have been done to the road infrastructure to increase island wide connectivity. Roads have been added or repaved, replacing existing pot-holed roads or dirt roads that are common outside of the tourist areas. Specifically, with the opening of the new Lombok International Airport in central Lombok, the road network around the area has been enhanced and this has greatly increased the connectivity between the major tourism centres in the northwest region, the airport and the new tourism growth areas along the south coast.

Figure 1 summarises the estimated distances and driving times from Lombok International Airport to some of the major tourism centres on the island.

FIGURE 1 DISTANCE BETWEEN THE AIRPORT AND MAJOR TOURISM CENTRES, LOMBOK

Major Tourism Centres

Distance from

the Airport

(km)

Driving Time

(min)

Kuta 20 km 30 min

Mataram 33 km 45 min

Senggigi 50 km 60 min

Sekotong 60 km 80 min

Tanjung 75 km 105 min

Source: HVS Research

Electricity Supply – The expansion of electricity capacity and distribution are being fast-tracked to cope with the increasing demands. Two more coal-fired power plants are expected to be operational by the end of 2013, adding to the existing 25-megawatt power plant in Jeranjang and doubling Lombok’s current capacity. In addition, a high-voltage electricity transmission network is being laid out around the island. The network, which stretches up to about 300 kilometres, is expected to be fully established before 2016.

Water Supply – Water mains have been added to the Kuta region, in view of the impending development of the Mandalika Resort in the south of Lombok. In general, water supply network has largely been established in major tourism centres such as Senggigi and the Gili Islands. However, the regions outside of these tourist areas, especially in the southern part of the island, still face recurring water problems during the dry season, due to a lack of clean water supply. In 2010, the Indonesian Government has announced plans for the construction of the estimated US$92-million Pandanduri Dam project in East Lombok. The project, which is expected to be completed by 2014, is primarily aimed at improving water supply in water critical areas in the southern part of the island.

Telecommunication Network – Telecommunication towers have also been erected throughout the island, providing a wide coverage of phone and internet connectivity.


Airport Statistics & Accessibility

Lombok International Airport is the main international gateway to Lombok and the only fully operational airport on the island. It commenced operation on 1 October 2011, replacing the Selaparang Airport. The new airport is located south of the city of Praya, central Lombok. It is approximately 40 kilometres south of the capital Mataram and 55 kilometres southeast of the popular tourist strip Senggigi.

The newly-built Lombok International Airport encompasses a total land area of 551 hectares, the second largest area after the Soekarno-Hatta International Airport. The airport has a 2,750-metre long runway to accommodate wide-bodied aircrafts such as the Airbus A330 and features a 21,000-square metre terminal area that can handle three million passengers per year; a significant increase from the previous handling capacity of 850,000 passengers at the old airport.

Figure 2 summarises the historical volume of visitor arrivals at the airport. The collection of past data before the opening of the new airport is based on the passenger traffic at Selaparang Airport.

FIGURE 2 PASSENGER ARRIVALS AT LOMBOK INTERNATIONAL AIRPORT, LOMBOK, 2001 - 2012

Source: Badan Pusat Statistik Indonesia

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International & Domestic Arrivals % Change

The total number of international and domestic arrivals in Lombok via Lombok International Airport (and previously Selaparang Airport) registered a compound annual growth rate (CAGR) of approximately 15.2%, from 181,429 passengers in 2001 to 858,710 passengers in 2012.

Airport arrivals have generally sustained robust growth between 2001 and 2012. In spite of the 2002 Bali bombings, total airport arrivals in Lombok continued to grow, increasing by 28.4% and 39.1% in 2003 and 2004 respectively. However, the growth in airport arrivals was halted in 2005, when the second Bali bombing in Jimbaran and Kuta further undermined travellers’ confidence in the safety of the region. Nonetheless, total airport arrivals in Lombok rebounded strongly in the following years. In 2012, despite the opening of the new airport, the growth in airport arrivals had remained fairly moderate, increasing by 6.8% over the previous year. The limited growth was likely due to the lack of new domestic and international flights to Lombok.


Figure 3 contains a compilation of the flight schedules of the airlines that travel to Lombok.

FIGURE 3 FLIGHT ARRIVALS AT LOMBOK INTERNATIONAL AIRPORT, LOMBOK

Airlines Sector

Number of Flights

(per week) Airlines Sector

Number of Flights

(per week)

Silk Air Singapore 5 Garuda Indonesia Jakarta 21

Tiger Airways* Singapore 3 Denpasar 7

Air Asia Kuala Lumpur 7 Surabaya 7

Jetstar Perth 4 Makassar 7

Nordwind Airlines Siberia Seasonal Lion Air Jakarta 35

Cathay/Dragonair** Hong Kong - Surabaya 14

Yogyakarta 7

Merpati Air Denpasar 21

Trans Nusa Air Denpasar 3

Bima 4

Sumbawa Besar 7

Wings Air Denpasar 35

Note: Surabaya 28

* starting 22 Nov 13 Citilink Indonesia Jakarta 14

** rumoured Surabaya 14

International Domestic


At present, the Lombok International Airport serves six domestic airlines, which includes Garuda Indonesia, Lion Air, Merpati Air, Trans Nusa Air, Wings Air and Citilink Indonesia. These domestic airlines travel to/from seven different cities within Indonesia, including Jakarta, Denpasar and Surabaya, making about 224 inbound flights to Lombok per week.

In addition, the new airport currently serves four international airlines, which includes Silk Air, Air Asia, Jetstar and a seasonal charter, Norwind Airlines. In particular, Jetstar recently launched its inaugural Perth-Lombok direct service on 24 September 2013. The flight route is the only direct service between Australia and Lombok, and operates four times a week. Overall, these international airlines travel to/from four different cities, including Singapore, Kuala Lumpur and Perth, making about 19 inbound flights to Lombok per week.

Moving forward, starting from 22 November 2013, low-cost carrier Tiger Airways will operate three flights weekly between Singapore and Lombok. The addition of this new flight route is likely to bring in more international tourists from Singapore, especially budget travellers. Furthermore, it was also reported that Cathay Pacific is considering introducing direct flights between Hong Kong and Lombok. This could potentially connect Lombok to other medium-haul markets outside of the Southeast Asian region, particularly the massive China market.

Seaport Accessibility

Besides the airport, the other main form of access to Lombok is through sea transportation, particularly fast crafts and public ferries.

Fast Crafts – There is an increasing number of licensed boat companies that operate direct fast craft services from Bali to Lombok or to the Gili Islands. From the Gili Islands, a range of connecting services is available for onward trips to mainland Lombok.

In general, tourists are using the fast crafts as an alternative to flying due to its relatively short journey time (approximately less than two hours) and the convenience of travel. The main advantage attributed to travelling on fast crafts over airplanes is that they dock directly at popular tourist havens on the Gili Islands or along the main tourist strip in Senggigi.


With the growth of Lombok as a tourism destination, many boat companies are capitalising on the expected increase in demand of travel between Bali and Lombok by introducing more direct fast craft services.

Public Ferries – There are currently two main harbours in Lombok that facilitate public ferry services. The Lembar Harbour, which is located on the southwest coast, is the entry point for public ferries that ply the Bali-Lombok route. Due to the long journey time (approximately 3 to 4 hours) and the lack of accessibility from Lembar Harbour to other major tourism centres in the northwest of Lombok, few international tourists travel to Lombok via that option. Instead, the public ferry services are usually taken by local people for inter-island transport between Bali and Lombok.

The other harbour, Kayangan Port, is located in East Lombok and is the entry point for public ferries that ply the Sumbawa-Lombok route. Similar to the Lembar Harbour, the public ferry services that arrive at Kayangan Port primarily serve the local people.

Tourism and Visitation

To determine the effective relevance of the domestic market and the international source countries, an analysis of visitation to the region has been performed. The scope of the data covers the volume of visitor arrivals at star-rated hotels for the whole of West Nusa Tenggara, under which the island of Lombok falls. This is due to the lack of tourism data that specifically captures the Lombok market. Nonetheless, as most of the star-rated hotels in the province are concentrated in Lombok, the data should offer a fairly accurate representation of the trend of visitation to Lombok.

Figure 4 summarises the visitor arrivals at star-rated hotels in West Nusa Tenggara between 2007 and 2012.


FIGURE 4 VISITOR ARRIVALS AT STAR-RATED HOTELS, WEST NUSA TENGGARA, 2007 - 2012

Year

Total

Arrivals

International

Arrivals

Domestic

Arrivals

2007 165,953 — 41,971 — 123,982 — 25.3 % 74.7 %

2008 186,626 12.5 % 46,467 10.7 % 140,159 13.0 % 24.9 75.1

2009 212,364 13.8 56,070 20.7 156,294 11.5 26.4 73.6

2010 268,307 26.3 64,014 14.2 204,293 30.7 23.9 76.1

2011 312,223 16.4 71,846 12.2 240,377 17.7 23.0 77.0

2012 369,855 18.5 116,213 61.8 253,642 5.5 31.4 68.6

17.4 % 22.6 % 15.4 %


CAGR 2007-12

% Change % Change % Change % International % Domestic


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International

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Domestic Arrivals

Between 2007 and 2012, the total number of international and domestic visitor arrivals at star-rated hotels in West Nusa Tenggara grew at a CAGR of 17.4%. Specifically, over the same period, international arrivals have outgrown domestic arrivals, recording growth rates of 22.6% and 15.4% respectively.

In particular, international arrivals have increased from 71,846 in 2011 to 116,213 in 2012, a sharp growth of 61.8%. In comparison, domestic arrivals recorded a relatively muted growth of 5.5% over the same period. The significant change in international arrivals in recent years, especially in 2012, are partly due to the efforts of the provincial government in promoting Lombok and Sumbawa as new travel destinations, as well as growing demand from international tourists that are increasingly choosing Lombok over a crowded Bali, as a holiday destination.

Nonetheless, despite the fast growth in international arrivals, the breakdown of total arrivals in West Nusa Tenggara comprised of mostly domestic visitors. Between 2007 and 2011, domestic visitors consistently made up around 75% of the total arrivals. In 2012, the composition of international and domestic visitor arrivals was 31.4% and 68.6% respectively.

International Feeder Markets

Figure 5 illustrates the breakdown of international arrivals at the airport in Lombok, by country of origin, for 2012.


FIGURE 5 KEY SOURCE COUNTRIES, LOMBOK, 2012


Singapore, 19%

UK,

10%

Malaysia,

9%

Germany, 7%

France, 6%Netherlands, 4%

South Korea, 4%

Australia, 4%

USA, 3%

Russia, 2%

Others, 32%

In 2012, the primary source countries for Lombok are Singapore, UK, Malaysia, Germany and France. In total, the top five source countries contributed approximately 52% of the total international arrivals in Lombok.

Singapore was the top feeder market for Lombok in 2012, accounting for 19% of the international arrivals on the island, due to the availability of a direct flight service with Silk Air, between Singapore and Lombok. Likewise, the direct flight service provided by Air Asia between Kuala Lumpur and Lombok contributed to the high volume of international arrivals from Malaysia, which was ranked third (9%), just behind UK (10%). Traditional source markets such as Germany (7%) and France (6%) were the fourth and fifth largest countries of origin respectively.

As evident from the high volume of international arrivals from Singapore and Malaysia, the availability of direct flight service from a source country is critical in attracting international visitors. In the coming years, with the opening of new flight routes between Lombok and other cities, the composition of the key source countries is likely to shift accordingly. Notably, with the recent launch of the Perth-Lombok direct service on 24 September 2013, Australian is expected to make up for a large piece of the international arrivals pie, in the near future.

Seasonality of Demand

Figure 6 provides an indication of seasonality in the Lombok market for the period from 2010 to 2012.


FIGURE 6 SEASONALITY OF DEMAND, LOMBOK, 2010 - 2012


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Based on the above chart, seasonality of visitor arrivals in Lombok has remained fairly constant throughout the year for the past years.

The months of July, August, September and late December constitute the high season, marked by strong arrivals from the European markets. These high seasonal periods coincide with the dry monsoon season, which lasts from May to August, and the festive period in the last two weeks of December. A slight decline in visitor arrivals is usually observed during the wet monsoon season, especially in late January and February, as well as during Ramadan.

Average Length of Stay

The average length of stay of visitors staying at three- to five-star hotels is shown in the following chart. The scope of the data covers the volume of visitor arrivals at star-rated hotels for the whole of West Nusa Tenggara. As most of the star-rated hotels in the province are concentrated in Lombok, the data should offer a fairly accurate representation of the trend of visitation to Lombok.


FIGURE 7 AVERAGE LENGTH OF STAY, WEST NUSA TENGGARA, 2007 - 2012


2.80

3.30

2.91 3.01

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Domestic

International

During the period from 2007 to 2012, the average length of stay for international visitors remained fairly constant, whereas the average length of stay for domestic visitors underwent more noticeable fluctuations.

On the whole, the average length of stay at three- to five-star hotels in West Nusa Tenggara for international visitors is generally longer than domestic visitors. In 2012, international visitors typically stayed for 3.50 days. In comparison, domestic visitors only stayed for an average of 2.94 days over the same period.

Tourism Receipts

Figure 8 provides an overview of the tourism receipts for the hotel market in Lombok, including the breakdown according to the different regions, for the period from 2007 to 2012.


FIGURE 8 TOURISM RECEIPTS, LOMBOK, 2007 - 2012

Year West Lombok North Lombok East Lombok

Central

Lombok Mataram

Tourism Receipts

(Million IDR) % Change

2007 120,009 10,528 194 11,917 14,367 157,016 —

2008 138,809 12,286 215 13,804 17,244 182,358 16.1 %

2009 167,625 14,322 242 15,554 20,994 218,737 19.9

2010 185,402 16,311 276 18,049 23,900 243,938 11.5

2011 201,509 18,683 289 20,681 27,016 268,179 9.9

2012 227,047 20,566 312 23,429 31,199 302,553 12.8

14.0 %


CAGR 2007-12


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Between 2007 and 2012, total tourism receipts for the hotel market in Lombok grew at a CAGR of 14%. In 2012, total tourism receipts for the hotel market reached IDR302,553 million, an increase of 12.8% from the previous year. Out of which, tourism receipts from the West Lombok Regency constituted the largest percentage among the different regions, contributing around 75% of total receipts. This could be largely attributed to the thriving hotel scene along the popular tourist strip in Senggigi.

Further to the five-year provincial tourism development plan (or Rencana Pembangunan Jangka Menengah Daerah) 2009–13, one of the main strategies for the province to improve its domestic receipts is by focusing on developing the tourism sector. In 2012, total receipts from the tourism sector (including trade, hotels and restaurants) was the third largest source of receipts, contributing about 17% of the province’s GDP.

Hotel Market Supply

Figure 9 summarises the number of rooms in star-rated hotels in Lombok between 2010 and 2012.


FIGURE 9 HOTEL SUPPLY, LOMBOK, 2010 - 2012

2010 2011 2012

CAGR

2010-12

Number of Rooms

5-Star Hotels 223 239 259 7.8%

4-Star Hotels 828 1,022 1,115 16.0%

3-Star Hotels 375 731 979 61.6%

Total 1,426 1,992 2,353 28.5%

1- and 2-Star Hotels 505 369 441 -6.6%

Total 1,931 2,361 2,794 20.3%



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In 2012, the total number of rooms reached around 2,794 rooms. Out of which, the rooms in four-star hotels constitute the largest percentage (40%), closely followed by those in three-star hotels (35%), one- and two-star hotels (16%) and then five-star hotels (9%).

International brands that operate in Lombok include the Sheraton Senggigi, the Novotel and the Oberoi. The vast majority of the island’s hotel supply is non-branded.

Between 2010 and 2012, the supply of rooms in three- to five-star hotels grew at a CAGR of 28.5%. Notably, among the three categories, the supply of rooms in the 3-star hotels has shown the largest increase. In particular, in 2011, the supply of rooms in that category increased sharply from 375 rooms to 731 rooms, recording a year-on-year growth of almost 95%. This spike in supply is largely attributed to the openings of several relatively large-scale city hotels in 2011, such the 227-room Lombok Garden Hotel and the 117-room Lombok Plaza Hotel.

Tourism Initiatives

The tourism market in Lombok has enjoyed positive overall growth in demand in recent years. This is largely due to the provincial government’s efforts in the areas of regional planning and destination marketing.


Under Regional Regulation No. 9 of 1989 on regional tourism development in West Nusa Tenggara, 15 tourism development focus areas were identified and established. Out of which, nine of the focus areas are located on the island of Lombok. These areas include:

• Tourism Region of Rinjani (17,100 hectares)

• Tourism Region of Kuta, Seger, Aan (2,590 hectares)

• Tourism Region of Gili Gede (2,590 hectares)

• Tourism Region of Sire, Gili Air, Senggigi (1,800 hectares)

• Tourism Region of Gili Sulat (1,317 hectares)

• Tourism Region of Gili Indah (650 hectares)

• Tourism Region of Selong Belanak (480 hectares)

• Tourism Region of Sade Village (315 hectares)

• Tourism Region of Suranadi (96 hectares)

In addition to the above areas, the beach at the southern part of Lombok has also been earmarked as one 1 of the 88 Indonesia Tourism Strategic Areas by the Indonesian government. On the whole, these strategic areas are likely to represent the key growth areas, in support of the overall development of the tourism sector in Lombok.

The provincial government has also been actively introducing tourism projects and promotional activities to create awareness and attract visitors to the West Nusa Tenggara province. One of the newly-launched tourism projects is the Tambora Greets the World campaign, which seeks to bring two million visitors to West Nusa Tenggara in 2015. This campaign encourages visitors to experience Mount Tambora and the surrounding landscapes, and is in association with the 200th anniversary of the massive volcanic eruption that took place in 1815. In addition, the provincial government has also launched a new branding strategy to establish the West Nusa Tenggara province as the national Meetings, Incentives, Conferences and Exhibitions (MICE) centre. In order to support the new strategy, the provincial government is aggressively promoting the destination through main media channels such as tourism websites, and participating in major national and international tourism events to engage key MICE industry players.

Hotel Performance

The growth in tourism demand and improved accessibility has influenced the hotels in Lombok very positively. Both occupancy and average room rate have improved remarkably.

Figure 10 summarises the increase in occupancy and room rate of a 953-room sample of four- and five-star hotels, between 2010 and 2012, with a forecast for the year 2013.


FIGURE 10 LOMBOK HOTEL MARKET PERFORMANCE (IDR)


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The market’s arrival growth and limited new supply growth in recent years, has seen hotels in this sample improved their occupancy rates tremendously, from an aggregate of 56.4% in 2010, to 70.2% in 2012. Robust demand from the domestic market was aided by strong arrival growth from countries such as, Malaysia, Singapore, France, and Australia amongst others.

Room rates did not stay behind, and grew by a CAGR of 5.0% over the same period, with accelerated growth in 2012, of 6.7%. Strong growth in room rates is expected to continue for 2013, with most hotels expecting double-digit average rate growth of at least 12.0%, in anticipation of a higher availability of air routes, and increasing demand from higher yielding markets, such as Australia and Singapore.

Occupancy growth is expected to be limited, given the seasonal nature of demand for the market. However, most hotels expect a modest growth in occupancy of a few percentage points.

Recently, Lombok is benefitting from frustrated demand from Bali. It is understood that the tranquil and relatively genuine, untouched nature of Lombok is growing in popularity with tourists that are seeking alternatives to the increasingly strained tourism infrastructure of Lombok’s neighbour, Bali. Trips to Bali are simply cut short, or are not booked at all, in order to explore Lombok and the Gili Islands in search of relaxation and tranquillity.

New Resort Supply

Hotel supply growth is expected to increase in the medium-term with growing interest from regional and domestic investors. The following table contains a compilation of new hotel and resort supply that is expected to enter the hotel market between 2013 and 2018.


FIGURE 11 RESORT DEVELOPMENT PIPELINE LOMBOK

Proposed Property

Number of

Rooms (est.) Location

Opening

Year (est.) Development Stage

Sudamala Suites & Villas Lombok 35 Senggigi June 2013 Operational

Svarga Resort 25 Senggigi Late 2013 Operational

Spirit Hotel 66 Nipah Bay Late 2013 Under Construction

Sundancer 142 Sekotong Barat 2014 Under Construction

Royal Kamuela Villas 50 Senggigi 2015 Site Work Underway

Aston International Condotel 411 Senggigi 2016 Early Development

Proposed Santosa 346 Southern Lombok 2016 Early Development

Proposed Five-Star Resort - Sire Bay 2016 Rumored

Proposed Five-Star Resort - Kuta / Mandalika 2017 Rumored

Proposed Resort - Southern Lombok 2017 Rumored

Proposed Five-Star Resort - Southern Lombok 2018 Rumored

Proposed Five-Star Resort - Southern Lombok 2018 Rumored

Total 1,075


A total of largely 1,075 confirmed rooms are expected to enter the Lombok resort market between 2013 and 2016.

However, a large number of projects are rumoured to be in the early stages of planning, mostly in southern Lombok, and could potentially constitute a couple of thousands of rooms. Both individual sites, and detailed master plans, are in early stages of development, such as the Mandalika development.

Mandalika

The Mandalika Resort in south Lombok is a key tourism initiative supporting the overall growth of the tourism. The Mandalika tourism development zone is being developed by the Bali Tourism Development Corporation (BTDC), the company that successfully developed the Nusa Dua hotel complex, in conjunction with the Indonesian Government. Plans for this integrated resort development include high-end hotels, resorts and residences, integrated theme parks, a marina and a seaport, 18- hole Jack Nicklaus golf course, convention centre and a F1 racing track, surrounded by a 3,000 hectare conservation zone. The development zone comprises of approximately 1,200 hectares of land along the south coast and includes approximately 7.5 kilometres of beaches, spanning from Kuta through Tanjung Aan to Gerupuk. It is understood that the Mandalika development will be divided into three main areas:

Tanjung Aan – The first area, on which development will be focused, is the Tanjung Aan area. A memorandum of understanding (MOU) has already been signed with several interested investors. By the end of 2013, road projects will take place and are planned to be completed in eight to nine months. Overall, the development in Tanjung Aan is projected to be completed within the next five years.

Kuta – Subsequently, development planning will be focused on the Kuta area. Currently, the development process is still in the bidding stage. According to the authorities, they are waiting for at least one more investor before starting the bid process. In addition, road works in the area will commence upon completion of the road projects in Tanjung Aan.

Gerupuk – The third phase of development is the Gerupuk area. According to the authorities, they have yet to receive serious interest from any investor at the moment.


MASTERPLAN OF MANDALIKA RESORT

Sundancer

The Sundancer development site totals 49 hectares and is located on prime beachfront land, in the south-west of Lombok, called Sekotong. The overall development will be built in stages, starting with a five-star resort. Further stages will include residential developments, and potentially additional resorts.

In summary, the following areas in Lombok are holding potential for future resort and tourism development, and/or are experiencing strong investment and development interest.

Area 1 - Kuta

Currently known as predominantly a back-packer destination, this area is poised for strong development growth, not in the least because of the impending Mandalika integrated resort development.

Kuta and the surrounding beaches are well-known for their pristine white sand and crystal clear sea. This coastal region has also gained an international reputation as one of the best surfing destinations in Southeast Asia.

The attractive sandy beaches and an array of leisure activities, coupled with its proximity to the new airport, make Kuta one of the eye-catching areas for resort development in Lombok.

Area 2 – Tanjung Aan

Earmarked as the first development focus area within the Mandalika tourism development zone, this area is likely to witness waves of tourism-related development in the future.

On top of its natural qualities, the availability of developed infrastructure in Tanjung Aan makes the area appealing for potential resort development that is alleged to take place imminently over the next few years.


CURRENT AND FUTURE AREAS FOR RESORT DEVELOPMENT

Area 3 – Tanjung Ringgit

The main attraction of the coastal region of Tanjung Ringgit is the famous strip of pink beach, which is one of the only seven pink beaches in the world. The rarity of such a natural landscape is certain to enhance the exclusivity of potential resort development in the area. Besides the pink beach, this beach also has very impressive natural scenery, surrounded by dramatic cliffs.

Area 4 – Selong Belanak

Unlike the western coasts of Lombok, Selong Belanak is still unexplored. Despite its understated reputation, the area possesses breathtaking beaches and sea views, and is regarded to be one of Lombok’s best beaches.

With infrastructure already in place, located at less than 20 minutes from the airport, the area is primed for development in the coming years.

Area 5 – Sekotong

Sekotong is considered as an off-the-beaten-path tourist destination in the southwest of Lombok. The area has generally become more accessible in recent years with the construction of road infrastructure and the opening of the new Lombok International Airport near Praya. In addition, the region has several unique selling features such as the famous Dessert Point surf site and the three nearby islands, Gili Nanggu, Gili Tangkong and Gili Sudak, which feature pristine beaches.

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With the expected completion of the landmark 49-hectare Sundancer Resort in 2014, this area is expected to be put more firmly on the tourism map.

Area 6 – Mangsit

Located slightly north of the main tourist strip in Senggigi, Mangsit is well-positioned to benefit from the positive spill over effects of increasing tourist arrivals in Senggigi. Due to the rapid growth of demand for accommodation in Senggigi in recent years, Mangsit appears to be the next area of future resort development. With some resorts already in operation, Mangsit primarily caters to the high-end traveller and is the gateway to the north of Lombok to areas such as the Gili Islands, Tanjung and Mount Rinjani.

Area 7 – Tanjung

While accessibility remains a challenge due to its distance from the new airport, there is an opportunity to optimise the quiet and isolated beaches in the Tanjung area and to develop luxury products targeted at high-end travellers. In particular, potential luxury resort development will agglomerate well with the existing five-star resorts such as The Oberoi Lombok and Hotel Tugu Lombok, which are already well established in the area.

MARKET OUTLOOK

The tourism sector in Indonesia continues to expand, as evident from the constant year-on-year growth in international tourist arrivals over the past few years. In particular, there is a growing interest in emerging resort destinations, with many market players and travellers taking note of their massive potential.

Specifically, in the case of Lombok, the central and provincial governments are actively promoting the destination, alongside the neighbouring island of Sumbawa, as Indonesia’s next big tourism destination.

Moving forward, new growth areas in the south coast of Lombok will witness waves of tourism-related development, with the impending completion of the Sundancer Resort and the early phases of the Mandalika Resort, plus many pristine sites earmarked for development.

Buoyed by the opening of the new airport and the sustained growth in tourist arrivals, Lombok is poised to enter the next phase of development and build on its growing reputation to become a top tourism destination in the medium-term.

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HVS Global Hospitality Services | 6 Temasek Boulevard, #23-01A Suntec

Tower 4, Singapore, 038986

www.hvs.com

About HVS

HVS is the world’s leading consulting and services organization

focused on the hotel, mixed-use, shared ownership, gaming,

and leisure industries. Established in 1980, the company

performs 4500+ assignments each year for hotel and real estate

owners, operators, and developers worldwide. HVS principals

are regarded as the leading experts in their respective regions

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From its offices in Singapore, Jakarta, Beijing, Shanghai and

Guangzhou, HVS has appraised or advised on existing hotels and

resorts, as well as development projects located in more than

100 cities and resort markets across Asia Pacific. The team’s

extensive project experience encompasses consulting and

strategic advice, development feasibility studies, investment

sales and acquisitions, hotel asset management and hotel

management company search for a host of project types –

hotels, resorts, serviced residences, golf courses, mixed-use

complexes, residential, office and retail.

About the Authors

Peh Jun Ren is an Analyst

with HVS Singapore,

specialising in hotel

valuation and consultancy.

Jun Ren graduated with a

Bachelor of Science

(Honours) in Real Estate

from the National University

of Singapore. He provides

research and analytical support for a wide range of

hotel valuations and feasibility studies across the

Asia Pacific region.

Muhammad al Ayyubi, also

known as “Abi”, is the Sales

and Marketing, Conference

Manager of HVS Jakarta. He

also provides research

support for feasibility

reports in Indonesia. Abi

earned his bachelor’s degree

in business law from Andalas

University, Indonesia and is currently finishing his

masters of tourism from the Trisakti Institute of

Tourism Indonesia. He is a member of the Indonesia

Tourism Intellectual Association (ICPI).

Marc Kramer is Senior

Vice President Consulting

of HVS in Singapore. Marc

has more than 17 years of

hospitality experience and

has held roles in sales and

marketing, operations,

and in the advisory field.

Since joining HVS, Marc

has valued and advised on numerous hotel and

resort projects and master planned developments in

Europe, Middle East and Asia, and has conducted

various hotel management contract negotiations

and strategy advisory assignments in Asia.

in focus: lombokgili islands – the famous gili islands, which consist of gili trawangan, gili air...

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