In a bold move that could reshape the island's tourism landscape, Bali Governor Wayan Koster has announced plans to halt the operation of Airbnb and similar short-term rental platforms.
The statement was delivered on December 3, 2025, during the 15th Regional Conference of the Indonesian Hotel and Restaurant Association (PHRI).
Koster argues that many short-term rental activities are operating illegally, predominantly managed by foreign nationals, creating losses for Bali’s government as revenue fails to match the rapid growth in tourist arrivals.
Below is the full breakdown of the issue—with insights and steps property investors can take to navigate this shifting landscape.
Key Takeaways
- Governor Koster proposes stopping Airbnb due to lost tax revenue and widespread illegal rentals run by foreign hosts.
- Bali recorded PAD Rp15.3T in 2025, but revenue growth is not keeping pace with tourism numbers.
- Experts expect stricter regulations rather than a total shutdown. A full ban could reduce villa options and raise hotel demand, but may also push rentals underground.
- Investors are advised to ensure full permits, correct zoning, TDUP licensing, and consider long-term rental models instead of short-term ones.
Why Airbnb Is Under Fire
Governor Koster’s key criticism centers around digital accommodation platforms like Airbnb, which he claims are not contributing adequately to Bali’s locally generated revenue or Pendapatan Asli Daerah (PAD).
Tourist arrivals have surged past pre-pandemic levels, hitting 6.3 million foreign visitors in 2024, yet hotel occupancy rates have not risen proportionally.
“This will be reviewed, and we will propose stopping [Airbnb services],” Koster stated at the conference.
He elaborated, “Airbnb does not fully support Bali’s local economy, that’s what’s happening now… We must be united; it’s not only the government’s responsibility but all of ours.”
Bali Financial Picture
Data from the Bali Regional Treasury Office shows the province’s PAD reached IDR Rp15.3 trillion (approximately USD $960 million) by October 2025, with regional taxes contributing Rp12 trillion (USD $721 million).
This figure represents only 71% of the total target of IDR Rp21.5 trillion (approximately USD $1.29 billion).
From the Rp12 trillion in tax revenue, the largest contributor was the Tax on Specific Goods and Services (PBJT), valued at IDR Rp7.13 trillion (USD $428.5 million).
PBJT includes taxes from hotels, villas, cafés, restaurants, entertainment venues (bars, clubs, shows), and certain food and beverage sales.
What Governor Koster considers the core issue is that PBJT is growing very rapidly (14.76%), yet the hotel sector—despite being part of PBJT—has not received a proportional share, even though tourist numbers continue to rise.
Bali's PAD rose 9.58% compared to 2024, but Koster believes the overall revenue is still low and indicates a likely tax leakage problem, where income that should flow into Bali’s regional budget may instead be going to foreign property owners or unregistered operators.
Read More: Bali Yacht Investment on the Rise: A Smarter Option Than Property?
The Massive "Shadow Market" in Bali
PHRI (Indonesian Hotel and Restaurant Association) Bali Chairman, Tjok Oka Artha Ardana Sukawati, highlighted discrepancies in Bali’s accommodation data.
Currently, the organization has 378 registered accommodations. This number is far smaller compared to the estimated 16,000 units marketed online via Airbnb.
According to Oka, many Airbnb operations are believed to be run by foreign nationals who lease local residents’ homes and then re-rent them as daily accommodations through digital platforms—an activity considered illegal.
“This is very damaging because the rise in tourist visits is not aligned with regional revenue and occupancy levels,” Oka stated.
The call for action has garnered strong support from the national hotel association.
Hariyadi Sukamdani, Chairman of the PHRI, advocated for a regulatory approach similar to Singapore's, where short-term rentals in apartments are effectively banned and enforcement is strict.
“Regulations are strictly enforced. Apartment owners report neighbors offering daily rentals, and it’s very effective,” he noted, pointing out that Singapore maintains hotel occupancy rates around 78% despite this restriction.
Read More: Hotel vs Villa in Bali: What Do Tourists Prefer in 2025?
Bali Airbnb Ban Implications
A complete ban on platforms like Airbnb, if implemented, would trigger a major shift in Bali's tourism economy.
- For Travelers: The range of affordable and unique accommodation options, particularly villas popular with families and long-term visitors, would drastically shrink. This could lead to higher prices in licensed hotels and potentially alter the demographic of tourists visiting Bali.
- For the Market: Licensed hotels and villas would likely experience a surge in demand. However, experts warn a blunt ban could push the rental market further underground, onto social media and messaging apps, making it even harder to regulate and ensure guest safety.
- The More Likely Path: Most observers believe an outright platform ban is a starting position for negotiation. The more probable outcome is a severe tightening of regulations, potentially requiring platforms to verify and display license numbers for each listing or automatically withhold taxes.
This Crackdown Is Not New, Bali Has Been Enforcing Rules for Years
Governor Koster's threat, while striking, is not the first attempt to rein in the sector.
It follows an ongoing, aggressive enforcement campaign throughout 2025.
- Existing Laws: Indonesian law already requires any short-term rental activity to be licensed as a commercial tourism business. This involves obtaining a Business Identification Number (NIB) and a tourism accommodation license, either a Tanda Daftar Usaha Pariwisata (TDUP) or a Pondok Wisata for smaller homestays.
- 2025 Crackdown: Authorities have moved from warnings to active penalties. This has included the sealing of unlicensed villas with official notices, tax audits, and even demolitions. In a high-profile case in July 2025, Governor Koster oversaw the demolition of 48 illegal structures at Bingin Beach.
- The Core Issue: Despite these rules, estimates suggest a vast majority of Bali's Airbnb listings—numbering over 39,000 as of mid-2025—operate without the proper TDUP or Pondok Wisata license. This allows them to avoid the 10% hotel tax levied on formal accommodations, creating an unfair price advantage.
What Should Bali Property Investors Do Now?
The message is clear: informal short-term renting is entering its final chapter. Legal compliance is no longer optional.
If you own or plan to invest in a Bali property, take these immediate steps:
- Never skip legal structure audit. Review your business license (KBLI code) and all property permits.
- Ensure you are registered for and paying the correct regional hotel and restaurant taxes. Learn more about Bali property taxes here.
- Buy in the right land zoning. Verify that your property has the correct tourism business license (TDUP) and that its use complies with local zoning laws.
- If using a local management company, verify they hold the proper tourism licenses for short-term rentals.
- Re-evaluate your short-term rental business plans. Consider pivoting to long-term leases (3+ months) or exploring compliant hotel investments.
Read More: Can Foreigners Buy Property in Bali? Full Legal Guide for You
Conclusion
Governor Koster has signaled that enforcement will intensify starting in 2026, with a focus on foreign-run rentals that lease local property.
For now, the announcement serves as a clear warning to thousands of unregistered operators: the era of unregulated short-term rentals in Bali is coming to an end.
Therefore, we emphasize the importance of having complete operational permits and fully licensed property to avoid potential closure by authorities. And, Bali Villa Realty is ready to assist you.
Bali Villa Realty is a legally registered real estate agency in Bali, and we have helped many foreign investors purchase property safely and efficiently.
Our in-house legal team ensures every listing is valid, supported with full due diligence and proper operational licensing for rental businesses.
This way, you can invest in Bali with confidence and peace of mind.
Want to learn more or just discuss your plans first? Book a free session (no strings attached) with our senior expert agent anytime.
FAQ
Airbnb is an online marketplace where people can rent out or book accommodation — from private rooms and apartments to villas or entire homes.
Safety issues can happen anywhere, but in general, Airbnb is considered safe.
Airbnb offers a more personal and local stay, with flexible accommodation types and check-in/check-out rules. However, facilities and security vary depending on the host.
Hotels, on the other hand, provide a more consistent experience with professional services and guaranteed security — though they’re usually more formal and less flexible.
