Ultimate Guide: How to ​​Start an Airbnb Business in Bali

Starting an Airbnb business in Bali might feel a bit overwhelming at first, especially if you’re a foreign investor. There’s a lot to think about, like budget, location, amenities, and upkeep.

But don’t worry. While it does come with its challenges, renting out a property in Bali is absolutely possible for foreign investors.

Let’s take a look at how the Airbnb market is doing in Bali and explore how you can get started with your own villa rental business.

Key Takeaways

• Bali’s Airbnb market is booming, with over 70,000 listings by 2024 and solid profitability—especially in top areas like Canggu, Seminyak, and Ubud where average annual earnings reach around $16,900 and occupancy rates average 65%.
• Foreigners can legally rent out villas on Airbnb by using legal ownership structures like Hak Pakai or PT PMA, securing the correct zoning (Tourism/Commercial), and obtaining a Pondok Wisata License or operating under a company structure.
• Budgeting is essential, with major costs including villa purchase ($200K–$1.25M), furnishing and renovation ($10K–$70K), licenses/legal fees ($1.5K–$3K), management (20–30% of income), and taxes (10% rental income tax).
• Some strategies to stand out in a competitive rental market are offering unique guest experiences, collecting strong reviews, using dynamic pricing, and ensuring your property is ‘Instagram-worthy’.

Dive Into the Market: Available Bali Villas for Sale – Leasehold and Freehold

Understanding the Market Dynamics

Airbnb’s growth in Bali has been massive. By 2024, there were over 70,000 Airbnb listings in Bali.

The property market shifted as more investors bought villas to rent them out on Airbnb.

This made Bali one of the top places for short-term rentals.

Read More: Buy Villa in Bali: Honest Guide about ROI and Foreign Ownership

How Profitable is the Airbnb Business in Bali?

When considering investing in an Airbnb in Bali, it is essential to consider the potential earnings and market dynamics.

Bali is a prime location for short-term rentals, with its thriving tourism industry attracting visitors year-round.

And that’s why you can see the growing trend towards private Airbnb.

Here, look at the Average Daily Rates chart for 2-bedroom rentals in Indonesia, in 2020.

This suggests that Airbnb properties in Bali, particularly 2-bedroom ones, can charge higher rates compared to traditional hotel accommodations.

On average, Airbnb hosts in Bali can expect to earn a solid annual revenue. 

For example, in top locations like Seminyak, Canggu, and Ubud, a typical listing can bring in significant earnings, often averaging around $16,900 annually. 

Factors like occupancy rates and daily rental prices drive this profitability.

Occupancy rates are a crucial metric, and in Bali, they average about 65%.

Your property will likely be booked for most of the year, ensuring a steady income stream. 

Depending on the property’s location and amenities, the daily rates can also be attractive, ranging between IDR 1,526,423.

Read More: How to Maximize Your Bali Villa Bookings on Airbnb

How Foreign Owners Can Legally Rent Out Their Bali Property on Airbnb

Renting out your property on Airbnb in Bali as a foreign owner can be a lucrative opportunity. 

Still, it comes with specific legal requirements that you need to follow to stay compliant with Indonesian law. 

Here’s a quick guide to help you understand the process of renting out your property on Airbnb legally.

1. Property Ownership Rules in Bali

First and foremost, it’s essential to understand that foreigners cannot directly own freehold land in Indonesia.

However, you can acquire property through a few legal structures:

• Hak Pakai (Right to Use). This allows foreigners to use the property for a specific period, usually up to 30 years, with the possibility of extending it.
• PT PMA (Foreign Investment Company). This allows a foreigner to own property under the company’s name. It’s often used for commercial purposes, like renting the property on platforms such as Airbnb.

2. Zoning Regulations

Bali’s land is divided into different zones, such as Residential, Commercial, and Tourism zones. 

If you plan to rent out your property on Airbnb, it must be located in a Tourism zone or a zone that allows commercial activities.

These zones are often near popular attractions, which makes them more desirable for short-term rentals.

Villas in these zones are legally permissible for rentals and can enjoy a steady flow of guests, which means high occupancy rates.

Read More: New Bali Construction Ban Explained (And Why It’s Not All Bad)

3. Obtaining a Rental License

To legally rent out your property on Airbnb, you must obtain the appropriate license, such as Pondok Wisata License. This is the most common license for short-term renting out villas or houses. 

It’s specifically designed for small-scale accommodations like villas and guesthouses. The license allows you to operate your property legally as a tourist accommodation.

Since only Indonesian citizens can directly hold this license, many foreign owners partner with a local Indonesian citizen who can hold the license on their behalf. 

Alternatively, you can establish a PT PMA, where the company holds the license. However, there are certain things you should be aware of:

• Your property must be registered as a business, and you must apply for the necessary permits from the local government.
• The property must meet specific environmental and building standards, which must be assessed before the license is granted.

If your property in Bali already has a Pondok Wisata permit, you can rent it out legally on platforms like Airbnb.

4. Taxation

Foreign owners renting out their property on Airbnb are subject to taxes:

• 10% Rental income tax: This applies to individual owners on gross rental income.
• Up to 25% Corporate tax (PT PMA): This is the tax on rental income for foreign-owned companies, with a separate 20% withholding tax on dividends to foreign shareholders.
• 10% VAT: This applies if rental income surpasses a certain level.

It’s crucial to consult with a local tax advisor or accountant who understands the latest regulations to ensure you’re meeting all legal tax obligations accurately.

Read More: Cost of Property in Bali: What You Need to Know (2025)

How to Start an Airbnb Business in Bali

Starting an Airbnb business in Bali can be a great way to capitalize on the island’s booming tourism industry. Here’s a guide to help you get started:

1. Choose the Right Property

Select a property in a prime location.

This Google Trends data highlights that Ubud (blue) was a top area for Airbnb rent seekers, especially before COVID-19.

Post-pandemic, Canggu (red) and Seminyak (yellow) show steady demand, confirming their status as popular spots for Airbnb rent seekers in Bali.

For investors, these trends suggest strong potential for high rental yield and solid occupancy rates in these top areas.

But what property type that is popular for Airbnb in Bali?

Villas are the most common type of Airbnb rental in Bali, but you can also consider guesthouses, apartments, or unique accommodations like bungalows.

However, entire homes, like villas, have higher occupancy rates than hotels or shared rooms. 

2. Obtain the Necessary Licenses

Register your property as a business with the local authorities. This includes getting all the documents above (like Pondok Wisata License) and a tax identification number (NPWP).

Here’s why getting an NPWP is essential for running an Airbnb business in Bali:

• Legal Compliance: Required for registering your business and legally operating in Indonesia.
• Tax Filing and Payments: Necessary for reporting and paying taxes on your rental income.

Obtaining an NPWP is not just a bureaucratic step—it’s a foundational requirement that ensures your Airbnb business in Bali operates legally and smoothly. 

3. Hire a Property Management Company

Given the complexities of managing a rental property in Bali, many foreign owners hire a local property management company. 

These companies handle everything:

• Obtaining licenses to manage bookings
• Providing guest services
• Ensuring compliance with local laws

This can be particularly useful if you are not based in Bali full-time.

Read More: The Ultimate Guide to Property Management in Bali

4. Ensure Compliance and Quality

On top of staying compliant, keeping your property in great shape is key. Make sure you do regular inspections, manage waste properly, and keep things like the swimming pool well-maintained.

A positive guest experience leads to good reviews, which is crucial for maintaining a high occupancy rate and profits (ROI).

Budgeting for Airbnb Rental Business in Bali

Budgeting is crucial when planning to start an Airbnb rental business in Bali. 

You want to ensure you’re fully prepared for all the costs of running a successful and profitable business. 

Here’s a simple breakdown to help you understand the key expenses:

Category	Estimated Cost	Notes
1. Property Purchase	$200,000 – $1,250,000 USD	Based on location (e.g., Seminyak, Canggu); prices reflect demand in prime areas
2. Renovation & Furnishing	– Renovation: $10,000 – $50,000 USD – Furnishing: $10,000 – $20,000+ USD	Luxury villas may exceed this range; includes furniture, appliances, and decor
3. Licensing & Legal Fees	$1,500 – $3,000 USD	Includes legal fees for obtaining the Pondok Wisata License
4. Management & Maintenance	– Management: 20–30% of rental income – Maintenance: $2,000 – $5,000 USD/year	Covers property management, pool, garden, and general upkeep
5. Listings	~3% of booking subtotal	Airbnb service fee; standard across all markets
6. Taxes & Insurance	10% of gross rental income	Applied to rental income in Indonesia
7. Unexpected Expenses	~10% of total budget	Recommended buffer for emergency repairs or market changes

1. Property Purchase

Property prices in Bali can vary widely depending on the location. Purchasing a villa in areas like Seminyak or Canggu typically costs between $200,000 to $125,000 USD. 

This price range is based on market data and reflects the demand for prime locations.

2. Renovation and Furnishing

Depending on the property’s condition, renovation costs can range from $10,000 to $50,000 USD. 

High-end renovations for luxury villas can exceed this range.

Furnishing a property typically costs between $10,000 to $20,000 USD, with higher-end furnishings increasing the budget. 

This cost includes all the essentials, such as furniture, kitchen appliances, and decor, needed to make the property attractive to guests.

3. Licensing and Legal Fees

The cost of obtaining a Pondok Wisata License can range from $1,500 to $3,000 USD, including legal fees. 

4. Management and Maintenance

Hiring a property management company typically costs 20-30% of your rental income.

Regular maintenance costs are estimated at $2,000 to $5,000 USD per year. These include general upkeep, pool cleaning, and garden maintenance, essential to maintaining property value.

5. Listings

Airbnb charges a service fee of approximately 3% of the booking subtotal, a standard fee across all markets, including Bali.

6. Taxes and Insurance

The income tax rate for rental income in Indonesia is 10%, applied to the gross income.

7. Unexpected Expenses

Setting aside 10% of your budget for unexpected costs is a good rule of thumb.

This ensures that you are prepared for any unforeseen expenses that may arise, such as emergency repairs or market fluctuations.

Airbnb Pricing Paradox

Many foreign investors want to create a lucrative Airbnb business, but how do you charge premium rates without losing guests to lower-priced competitors?

Let’s explore some tips on how to make this happen.

1. Position Your Property as a Unique Experience

When guests look for premium properties, they’re not just looking for a place to stay—they’re looking for an experience. So, instead of competing on price alone, focus on what sets your property apart.

Think about questions like:

• What makes my villa stand out from the rest?
• Is it the stunning views, the eco-friendly design, or the private chef experience?

Consider adding personalized touches that make your property memorable. 

Imagine a guest who sees two villas in the exact location—one offers a simple stay, while yours offers a dedicated yoga space with a private instructor available on request. 

That additional experience can make all the difference when guests are willing to pay more for a richer, more tailored stay.

2. Leverage Reviews and Social Proof

Guests often look for social proof when booking a high-priced villa—basically, reassurance that the property is worth the price.

Positive reviews, stunning photos, and testimonials can help convince potential guests to pay more.

But what if you don’t have reviews or have never rented out your property?

Don’t worry! There are still ways to build credibility and attract guests willing to pay premium prices. Here’s what you can do:

• Leverage Introductory Offers. Consider offering an introductory discount or package for your first few guests. For example, you could offer free airport pickups or a welcome dinner. Guests love value-added experiences, and this can quickly lead to positive feedback.
• Ask for Guest Testimonials from Early Stays. Once you’ve had a few guests, encourage them to leave detailed reviews highlighting what they loved most about your property. Make sure you add personalized touches to ensure they have a great experience worth sharing in their reviews.
• Focus on Trust Signals. Provide detailed information about the property, and list your credentials or partnerships with local property management companies. Show potential renters that you’ve ensured their stay will be seamless.

Positive reviews are a safety net for future guests and justify the premium price.

3. Flexible Pricing Strategies

Charging premium rates doesn’t mean you have to stick to a rigid price structure.

Consider using flexible pricing strategies to attract high-end guests during peak seasons and budget-conscious travelers during off-peak times.

Dynamic pricing tools, like Airbnb’s Smart Pricing or third-party platforms, adjust your property’s rates based on demand, seasonality, and competitor pricing.

This ensures you maximize your revenue during high-demand periods while keeping your villa occupied during slower times.

4. Make Your Airbnb Listing Instagram-Worthy

In today’s world, Airbnb properties that look great in photos naturally draw more attention. This is where an “Instagram-worthy” design comes into play.

Choose two or three key design elements that stand out—like a rooftop lounge, a Balinese-inspired garden, or a unique infinity pool. 

The more your villa inspires guests to take photos and share their experiences, the more likely you will attract new guests willing to pay premium prices for the bragging rights.

Conclusion: Invest in an Airbnb Villa

You’ve probably noticed how Airbnb is booming. With strong demand and solid returns, starting your own Airbnb business in Bali could be a highly profitable move.

We hope this guide has helped you understand the key steps and feel more prepared to begin your Bali Airbnb journey.

That said, we also know that finding the right villa—especially one that’s fully licensed—can be a bit tricky.

That’s where Bali Villa Realty comes in. We make the process simple and ensure your villa has all the necessary documents, so you can start earning rental income with confidence.

Looking for a villa to get started? Reach out to us for free expert advice and let’s find the right property that fits your goals.