The Indonesian government has swiftly responded to concerns over the increasing number of illegal accommodations operating in Bali.

A coordination meeting was held on Monday, 28 April, involving the Ministry of Tourism, local government officials, and the Bali Chapter of the Indonesian Hotel and Restaurant Association (PHRI).

During the meeting, it was announced that a task force had been established to monitor tourism accommodation on the "Island of Paradise," and measures or sanctions are currently being formulated for illegal operators.

The mystery of declining hotel occupancy

PHRI has been investigating the decline in hotel occupancy rates, which have dropped by 10-20% despite a rise in tourist arrivals. According to their data, Bali is home to 593 starred hotels, 196 non-star hotels, and 2,852 legal villas, offering a total of 54,275 rooms.

“At first, we thought the decline was because foreign tourists were no longer staying in Bali but using it as a hub. But it turns out, many tourists are staying in illegal accommodations,” said Perry Marcus, Secretary General of PHRI Bali Chapter.

Since the start of 2025, hotel occupancy rates have fallen by 10-20% with typical occupancy ranging from 60-70% across the island’s 150,000 rooms.

Illegal accommodations = more privacy?

Many of the illegal accommodations in Bali are residential homes that locals have converted into rental properties for tourists. These properties often attract foreign visitors who, in some cases, sublet the spaces to other travellers at inflated prices. There are also instances where foreign nationals own these accommodations but register them under the names of Indonesian citizens to bypass ownership regulations.

PHRI’s investigation has revealed that the main distinguishing factor between legal and illegal accommodations is the level of privacy they offer. While facilities and pricing may not differ significantly, the increased privacy in illegal accommodations makes them more appealing to some tourists. Perry Marcus believes this is a key factor in their popularity.

Digital platforms give illegal stays a lift

Rizki Handayani Mustafa, Deputy for Industry and Investment at the Ministry of Tourism, who attended the meeting, acknowledged the role of digital booking platforms in facilitating the proliferation of illegal rentals. While she stated that the government does not yet have precise data on the number of illegal accommodations, she stressed the need for a collaborative approach to address the issue.

"This meeting aims to ensure a mutual agreement between the government and all stakeholders. We need to be data-driven and will work on strengthening the database,” Rizki said.

How illegal stays hurt the industry

The rise of illegal accommodations has been particularly detrimental to registered hotels and accommodation businesses, as these unregulated establishments often operate outside the tax system. Perry Marcus expressed concern about the strain this has placed on the local hotel industry.

“This has been a heavy blow, as hotels have been forced to sell rooms at significantly lower prices to survive,” he said.

As Bali continues to grapple with this issue, the government’s task force is expected to play a pivotal role in developing regulations that ensure the long-term health and sustainability of the island’s tourism industry.