Bali Hotels Struggle with Low Occupancy Despite Surge in Foreign Tourist Arrivals

Tourism Anomaly Raises Concerns Among Industry Stakeholders

Bali, Indonesia – In an unexpected twist for the island renowned for its tourism, hotel occupancy rates have plummeted despite a notable increase in foreign tourist visits. Industry experts are raising alarms as this paradox appears to stem from a surge in illegal accommodations that are taking away guests from registered hotels.

During a coordination meeting held on April 28, 2025, Perry Marcus, the Secretary General of the Indonesian Hotel and Restaurant Association (PHRI) Bali, highlighted the troubling trend. Data from PHRI indicates that average hotel occupancy has dropped between 10 to 20 percent since the beginning of the year, significantly deviating from the typical range of 60 to 70 percent for the island’s approximately 150,000 hotel rooms.

“The hotel industry in Bali is facing significant challenges as guest numbers dwindle. Despite an increase in foreign tourists visiting the Island of the Gods, we need to ask the fundamental question: where are these tourists actually staying?” Marcus stated.

Illegal Accommodations: A Growing Concern

As the PHRI analyzes the situation, the emergence of illegal accommodations—often residential properties converted into unlicensed hotels or villas—has been identified as a primary culprit. According to Marcus, many tourists are opting for these unregistered options, which do not contribute to local tax revenues and undermine the integrity of the legitimate hotel industry.

“Many guests are choosing illegal accommodations, which skews our data and adversely affects legitimate businesses,” he explained. To make matters worse, owners of these unlicensed properties often benefit from personal connections to guests, as friends refer friends, further disrupting the fair competition landscape.

Interestingly, while some illegal accommodations do not offer lower prices compared to registered hotels, they appeal to certain tourists due to the promise of greater privacy. Marcus remarked, “While the price might be comparable, some places are marketing enhanced privacy which attracts guests.”

Calls for Government Action

The impact of this trend is felt keenly by those operating within the legitimate hotel sector. Marcus emphasized the urgent need for the provincial government to enforce stricter regulations and take action to dismantle illegal accommodations, stressing that failing to do so jeopardizes not only businesses but also the broader economy of the island.

“The disparity caused by illegal accommodations is creating an unfair advantage for unregistered properties at the expense of those who comply with regulations,” he stated.

In response to the ongoing concerns within the industry, the Bali Provincial Tourism Office (Dispar) has taken proactive measures by organizing discussions with district tourism offices and accommodation associations to address the persistent decline in hotel occupancy. Tjok Bagus Pemayun, the Head of the Bali Tourism Office, confirmed that these meetings are aimed at accurately assessing the situation in line with directives from the Ministry of Tourism.

Conclusion

As Bali continues to attract increasing numbers of foreign tourists, the hospitality industry faces significant challenges due to the rise of illegal accommodations. The situation calls for a coordinated effort between government authorities and industry stakeholders to ensure fair competition and a sustainable tourism ecosystem that supports the local economy.

Bali’s allure as a premier tourist destination must balance with regulatory practices that protect the integrity of its legitimate hospitality industry, ultimately ensuring a positive experience for visitors and residents alike.