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It’s almost one and a half years since a magnitude 7.0 earthquake struck the island of Lombok, a major tourist destination in Indonesia’s West Nusa Tenggara Province. With its epicenter near Loloan Village in the North Lombok Regency, the earthquake destroyed or damaged about 80% of structures in North Lombok.

A total of 563 people were confirmed killed while more than 1,000 were confirmed injured and 417,000 people were displaced. In light of Lombok’s burgeoning tourist industry, we decided to briefly report on the impact the earthquake has had on the star rated hotel accommodation in the province. Has room occupancy recovered? What about the number of domestic and foreign guests?

At the time of the earthquake the Province of West Nusa Tenggara provided 1,332 hotels of which 88 were star-rated and 1,244 were budget hotels. The star rated hotels accounted for 7,675 rooms or 40% of the total number of rooms (19,353 rooms). The majority of star rated hotels were found in the Regencies of Lombok Barat (4,864 rooms), Lombok Utara (662 rooms) and the City of Mataram (1,650 rooms).

Over the past five years (2013-2018) the number of star rated hotel rooms had grown from 2,902 to 7,675 rooms, a CAGR of 21.5%. This compares with a CAGR of 9.8% for non-star rated hotel rooms which have grown from 9,214 in 2013 to 11,678 over the same period.

In response to the earthquakes on 29 July and 5 August, the Australian, British, Chinese, Malaysian and Singapore governments issued a travel advisory for their citizens who were intending to visit Lombok. These travel warnings deterred many foreign visitors from visiting the region in the months after the events of 5 August 2018.

For each of the following time-series of hotel guest arrivals, we have provided a forecast from July 2018, the month before the earthquake using the most accurate univariate forecast techniques available ( exponential or Box-Jenkins techniques). In this way we compared the actual results after the earthquake with the best available forecasts of likely guest arrivals and occupancy without the earthquake.

The total number of foreign and domestic guests staying in star rated hotels in the province has not recovered since the earthquake as illustrated in the following graph. Prior to the earthquake, the star rated hotel market was forecast to accommodate about one million guests in 2018, up 7.8% on 941,000 in 2017. Instead, the hotels captured about 792,000 guest nights, 15.8% down on 2017.

For the period August 2018 through September 2019, the hotels were forecast to accommodate 1,268,000 guest nights, but instead were only able to attract 740,000, down almost 42%. The graphs below demonstrate the extent to which each of the star rated categories have recovered from the impact of the earthquake. It appears that the 5 star hotels have witnessed the largest recovery, followed by 2 star hotels.

Historical and Forecast Growth (Pre- Earthquake) in the Number of Monthly Foreign and Domestic Guests That Stayed in Star Rated Hotels in West Nusa Tenggara 2006-2019

Source: Hotel Investment Strategies, LLC based on BPS Provinsi Nusa Tenggara Barat/Statistics of Nusa Tenggara Barat Province

While the forecast occupancy for the period August 2018 to September 2019 was 55.1%, the actual average occupancy was 41.4%, a drop of 13.7 percentage points. Average room occupancies have improved significantly over the last three months and we expect the recovery to accelerate over the next six months.

Historical and Forecast Growth (Pre- Earthquake) in Monthly Room Occupancy for Star Rated Hotels in West Nusa Tenggara 2006-2019

Source: Hotel Investment Strategies, LLC based on BPS Provinsi Nusa Tenggara Barat/Statistics of Nusa Tenggara Barat Province

Historical and Forecast Growth (Pre- Earthquake) in the Number of Monthly Foreign and Domestic Guests That Stayed in 5 – Star Rated Hotels in West Nusa Tenggara 2006-2019

Source: Hotel Investment Strategies, LLC based on BPS Provinsi Nusa Tenggara Barat/Statistics of Nusa Tenggara Barat Province

Historical and Forecast Growth (Pre- Earthquake) in the Number of Monthly Foreign and Domestic Guests That Stayed in 4 – Star Rated Hotels in West Nusa Tenggara 2006-2019

Source: Hotel Investment Strategies, LLC based on BPS Provinsi Nusa Tenggara Barat/Statistics of Nusa Tenggara Barat Province

Historical and Forecast Growth (Pre- Earthquake) in the Number of Monthly Foreign and Domestic Guests That Stayed in 3 – Star Rated Hotels in West Nusa Tenggara 2006-2019

Source: Hotel Investment Strategies, LLC based on BPS Provinsi Nusa Tenggara Barat/Statistics of Nusa Tenggara Barat Province

Historical and Forecast Growth (Pre- Earthquake) in the Number of Monthly Foreign and Domestic Guests That Stayed in 2 – Star Rated Hotels in West Nusa Tenggara 2006-2019

Source: Hotel Investment Strategies, LLC based on BPS Provinsi Nusa Tenggara Barat/Statistics of Nusa Tenggara Barat Province

Historical and Forecast Growth (Pre- Earthquake) in the Number of Monthly Foreign and Domestic Guests That Stayed in 1 – Star Rated Hotels in West Nusa Tenggara 2006-2019

Source: Hotel Investment Strategies, LLC based on BPS Provinsi Nusa Tenggara Barat/Statistics of Nusa Tenggara Barat Province