Property managers are the best placed to talk about their local markets. They’re incredibly resilient entrepreneurs. Even if you are not operating in one market, you can learn from others and adapt some techniques for our market.
For instance, you’d think that, with its borders closed to tourists since February 2020, Bali’s villas are sitting empty. Wrong. Not all of them. Some have 80%+ occupancy at the moment. Bali villa manager Andrew Macdonald, founder and director of ZenGuest Bali, explains how he’s pivoted his company twice since the start of the pandemic to capture new demand sources.
He had to change his marketing channels (e.g. being more active in Facebook groups to reach Russian travelers), his operations (from daily to bi-weekly cleaning), and add some amenities (e.g. rice cookers and bidet sprays to make Indonesian guests happy). We also talk about debunking clichés and how owners sometimes have preconceived ideas about some market sources. Russians were a great source of long-stay bookings until summer 2021, while affluent Indonesians have discovered the Bali villa lifestyle.
Video: How to pivot your Bali villa management company TWICE
Interview: Zenguest Bali’s Andrew Macdonald
I am with Andrew Macdonald he’s the founder of Zenguest Bali. These days being a property manager in Bali, Indonesia is not what you think. With not much travel coming in from Australia or Europe or the US, you may think that’s the Bali villas are sitting empty and that’s far from the truth. Andrew, can introduce Zenguest Bali?
We’re managing 32 villas. The management in Bali is a bit different to managing a short-term rental in most places because it’s full service. We have daily cleaning, and we’re basically available 24/7 to guests. That is the expectation of guests when they book here. It’s a very operations-intensive kind of business here with quite a lot of staff.
We were basically were okay until February 2010. Most of our bookings still came over, but then in March 2020, all the tourist visas were suspended into Indonesia. We lost tourists completely, and we’ve never regained them. The tourist visas have never been reopened since.
So, but what was open were longer-term visas, so-called Business Visas and Social Visas. Different forms of visas that were valid for between three months to four months. We got a whole lot of people coming over, basically fleeing the conditions in Russia, largely Russia, on these other visas. It was thousands of people came over and it was a big industry bringing people over, basically with the attraction that you could come and live in Bali and pay about $550 US a month for a beautiful two-bedroom villa with a swimming pool and regular cleaning.
So it was very attractive. Basically, our clientele became our clientele of monthly guests. So we started renting everything out monthly. We started doing that in March and basically from April 2020, recorded almost 100% occupancy the whole way through, right up to now.
How did you pivot your property management business? What did you have to do in terms of marketing channels, operations, service levels, amenities? And what did you tell to owners who had preconceived ideas against Russian, and now Indonesian travelers?
Airbnb and Booking.com were useless in that kind of circumstance. Everything was done through Facebook. The Facebook marketing groups for Bali villas have 30,000 or 40,000 members. We had a big pool of people on the island. Every time we needed to rent a villa, to renew a lease, and get new guests, we’d have to do up to 20 visits. That’d be a lot of haggling and negotiation. It was a lot of work because everyone wants to see the villa first, unlike normal holiday rentals where you are in another country.
So, but once we had the guests in, it was much easier because then we cut down our services, we cleaned twice a week, for instance. All of our costs were minimized, which was important because we’re only bringing in 20% of the revenue that we’re bringing in pre-COVID. There was no way we could survive, offering the same level of service that we offered, before COVID hit. Basically, that’s what kept us alive out there: Reduction in our services.
Let’s talk about the stereotypes. We did tell our owners and we updated them regularly. They’re asking who these new guests were and we told them: Russians. Most of our owners trust us to look after the villas for them. They don’t really have had much input, but there are a few who have very strong, preconceived attitudes and were very reluctant about having, particularly Russian guys. I don’t know exactly where the stereotype comes from, but, it’s totally untrue in our experience. We’ve had probably altogether about 40 guests from Russia and we haven’t had a single issue.
They’ve all been wonderful. They’re very good negotiators. In terms of, any damage, drunkenness, noise, parties, nothing at all.
Now, a couple of months ago, Russians started leaving Bali. A new wave of guests came in: Local Indonesians, usually from Jakarta, the capital city. What were the challenges of adapting to this new market?
About three months ago, all visas were suspended. There’s also a net outflow of the pool of people who were in Bali back to their home countries because things were getting bad in Bali.
We started finding that we were getting Indonesian people booking on Airbnb and Booking.com. And, because the word was spreading in Jakarta that you could get a great deal down here. The work-from-home thing was becoming much more prevalent and accepted. Tons of people came down from Jakarta and Surabaya, the other big city, to work from home in Bali. We may be in Indonesia, but we never had Indonesian guests before. We really weren’t set up for Indonesian guests. For instance, we didn’t have rice cookers. Some of our properties did not have bidet sprayers.
All those little things we had to adapt to because the guests demanded them. The other thing that we had to adapt to is the fact that all Indonesians have cars when they travel. They always use a car. You will either bring your other, have one of your staff bring a car down from Jakarta and meet you here, or you’ll hire something at the airport.
So, Bali went from a fly-to to a drive-to market in a few months! How about the cliché that Indonesian travel in huge groups?
In terms of groups, we were a bit worried about that because there is a stereotype about, which Indonesian share, that Indonesian travelers will try and jam a lot of guests into a very small space. We have seen a couple of occasions where that’s happened, but actually, it was before COVID.
Over this period, it hasn’t happened at all. That’s another thing that we had to reassure our owners about. Also, we’ve told them that” if you don’t want to accept Indonesian guests, you’re not going to have any guests”. Indonesians are the way of the future as well. The domestic market is going to be a very important one moving forward.
What are Christmas 2021 and early 2022 looking like? How about the new omicron variant?
It’s interesting because when I first saw this virus coming through and the Indonesian authorities acted quite quickly, for instance, just today, the quarantine was raised from three days to seven days for international arrivals, and there are more measures coming for sure.
I thought I’m going to have to look through all our bookings and check how many international arrivals we have coming in. I’m going to have to talk to them now because I don’t want to wait for them to cancel at the last minute. We have to find replacements at the last minute, when I looked through a book, we only had three that I had to worry about over December. So, which is amazing. All the other bookings are Indonesian so that they’re not affected.
We’ve actually become a lot more resilient, thanks to the Indonesian domestic market. We can now fill in the villas where previously we would have been at the mercy of international tourists arriving. When you look at Indonesia, that’s important for the future, because this is this COVID-19 disaster is one that’s affecting the whole world, but Indonesia has disasters nearly every year.
We have volcanoes, we have earthquakes, we have terrorism, we have all sorts of things. Each time, we get a huge drop-off in arrivals, a massive number of cancellations. We have a big financial impact. We now have this domestic market, which is much more resilient, in the face of natural disasters and things like that. Indonesians will keep traveling. They are used to volcanoes and earthquakes. It doesn’t worry them at all.
More articles about Bali and Indonesia
If you are interested in the Bali market, you will want to read our previous articles:
Redefining luxury villa rental management in Asia and Bali (with Andrew Macdonald as well)
Asia-Pacific: SE Asia villa market slumps (-66% in Bali), while Australia booms (+80% in Byron Bay)
Innovation at a Bali Villa Rental Management Company with Bukit Vista CEO
Elite Havens CEO: Why luxury villa rentals are the right format post-COVID
