Work backwards from what the finished rooms can earn. In an illustrative example — USD 200 a night at 65% occupancy, a typical operating margin and build cost — the land can carry about IDR 31 million per are (100 m²) per year on a 27-year lease, which is already the asking level in Canggu and Pererenan. Illustrative — not financial advice.
Why start from the room rather than the land?
Because the land is only worth what the business on it can pay. This is the residual method: estimate what the finished rooms earn, take off every cost except the land, and what is left is the most the land can carry.
Start with the rate. Build a competitive set of 8–15 comparable properties on Booking, Airbnb and data tools such as AirDNA or PriceLabs, matched on location, finish, size, amenities and type of operator. See how to set a realistic rate.
How full should you assume the rooms will be?
Use the market, not hope. Bali hotels ran at 74% occupancy in 2025; the villa market median is about 63%; the USD 500+ tier runs near 49%. A USD 200-a-night product should model 60–65%.
The top line is then: average rate × occupancy × 365 nights × number of keys (rooms). Information only.
What comes off before you get to profit?
First, booking channels. In year one, 70–85% of bookings come through platforms at 15–25% commission; established operators reach 35–40% direct, so model an average channel cost of about 12% once the business has settled.
Then management and operating costs, to reach gross operating profit (GOP — what is left after running the property). Around 35% of revenue is the regional reality. Information only.
How does time come into it?
A project ties up money for years before it earns: 24–36 months to build, 12–18 more to ramp up, then several years of operating profit to pay back what went in.
The method therefore uses a required yield — the annual return a buyer needs, with no debt, to justify the risk — of 10–12.5% as an input. Established markets offer 5–7% with cheap leverage; the Bali premium reflects frontier risk. This is an assumption the buyer chooses, not a forecast. Illustrative — not financial advice.
So what is left for the land, per room?
| Line | USD per key |
|---|---|
| Top line, per year (USD 200 × 65% × 365) | 47,450 |
| Gross operating profit (~35%) | 16,600 |
| Value supported at an 11.25% required yield | 148,000 |
| Build, fit-out, everything except land | −115,000 |
| Left for the land | 33,000 |
Each key needs about 64 m² of land (with Bali’s 15 m height limit, about 50% site coverage and 2–2.5 storeys). USD 33,000 per key is about IDR 830 million per are as an upfront lease — roughly IDR 31 million per are per year over 27 years. Illustrative — not financial advice.
How does the answer change with rate and occupancy?
Sharply. Here is the maximum land cost, in IDR per are per year, for different rates and occupancy levels:
| Your ADR | 55% occupancy | 65% occupancy | 75% occupancy |
|---|---|---|---|
| USD 120 | 6M | 18M | 31M |
| USD 150 | 7M | 23M | 39M |
| USD 200 | 9M | 31M | 52M |
| USD 250 | 12M | 38M | 65M |
So a USD 200-a-night villa that only reaches 55% occupancy can justify about IDR 9 million per are per year — less than a third of what it can carry at 65%. For the full argument, see what pink land should cost. Illustrative — not financial advice.
Sources: Horwath HTL / C9 Hotelworks 2026; HotStats; Airbtics; JLL; listing data. Illustrative model by Ascendure. General information about the Indonesian market, not legal, tax or financial advice.
The full method: What Pink Land in Bali Should Really Cost
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