Denpasar. Bali Governor Wayan Koster has announced plans to halt Airbnb-style short-term rentals across the island, arguing that unlicensed digital accommodations are eroding regional revenue and undermining Bali’s hotel industry.

Speaking at the 15th Regional Meeting of the Indonesian Hotel and Restaurant Association (PHRI) in Denpasar on Wednesday, Koster said his administration would formally propose discontinuing such operations. “We will review this and submit a proposal to stop it,” he said.

While tourist arrivals continue to rise, hotel occupancy, particularly among PHRI-member properties, has not recovered proportionally. He attributed the trend partly to Airbnbs and similar digital rentals that do not contribute to Bali’s locally generated revenue (PAD), especially from hotel and restaurant taxes. These include homestays, villas, guest houses, and houses or apartments used for daily rentals.

According to Koster, more than 2,000 hotels and villas are operating without permits. “Airbnb does not fully support Bali’s local economy. Many are illegal and problematic, we will enforce the rules without exception. This is not only the government’s responsibility but a shared one,” he said.

PHRI Calls for Clear Regulation, Citing Singapore Model

PHRI Chairman Hariyadi Sukamdani said Airbnb-style accommodations must be regulated at both national and regional levels, similar to Singapore’s approach, to ensure legal certainty.

“Daily accommodations must be categorized as hotels,” Hariyadi said on the sidelines of the PHRI Bali conference. He said that in Singapore, properties used for short-term stays must be hotels, while apartments can only be rented if tenants stay longer, typically a minimum of three months.

Local residents in Singapore also play a role, reporting to authorities when they find apartments being rented illegally on a daily basis. “Regulations are strictly enforced. Apartment owners report neighbors offering daily rentals, and it’s very effective,” Hariyadi said.

Singapore’s firm approach, he added, has helped keep hotel occupancy at an average of 78 percent despite the island’s high room rates. He hopes similar rules can be implemented in Indonesia, particularly in Bali, where tourism is the backbone of the economy and licensed hotels are struggling with occupancy.

According to PHRI, many illegal rentals in Indonesia are managed by foreign nationals who lease local homes and re-market them as daily accommodations through platforms based abroad.

“They are not operating under proper accommodation standards. The profit-sharing model used by these platforms has become a problem in many countries,” Hariyadi said.

PHRI Bali Chairman Tjok Oka Arta Ardana Sukawati added that the Airbnb model on the island often involves foreign nationals contracting local properties and then subletting them to tourists online. Bali’s current hotel occupancy rate is estimated at around 60 percent, far below expectations amid rising foreign arrivals, which reached 6.3 million in 2024, surpassing pre-pandemic levels.

Data from the Bali office of the Directorate General of Treasury showed that Bali’s locally generated revenue reached Rp15.3 trillion ($920 million)as of October 2025, or 71 percent of its Rp 21.5 trillion annual target, a 9.58 percent increase from a year earlier. Regional taxes contribute the most, amounting to Rp12 trillion, including Rp7.13 trillion from the tax on specific goods and services (PBJT), which includes food, beverages, hotels, entertainment, and the arts.