Bali Hotels Face Low Occupancy Rates Despite Surge in Foreign Tourist Arrivals

Bali, Indonesia – April 30, 2025 – The picturesque island of Bali is experiencing a tourism anomaly that is raising concerns within the hospitality industry. Despite a notable increase in the number of foreign tourists visiting the island, local hotels report unexpectedly low occupancy rates. This trend has sparked discussions among industry stakeholders, who believe that unregulated accommodations may be undermining the legal hotel sector.

Rising Tourist Numbers, Falling Occupancy

Perry Marcus, Secretary General of the Indonesian Hotel and Restaurant Association (PHRI) Bali, highlighted that the average hotel occupancy rate has dropped by approximately 10 to 20 percent since the beginning of 2025. Traditionally, hotel occupancy in Bali hovers between 60 to 70 percent, with a total of 150,000 hotel rooms available for guests.

"The hotel industry in Bali is complaining because guests are quiet," stated Marcus. "In fact, foreign tourists traveling to the Island of the Gods are increasing. Where do they stay?"

The Role of Illegal Accommodation

Marcus pointed to the infiltration of illegal accommodations — residential properties converted into lodgings without proper registration — as a primary factor contributing to the declining occupancy rates in established hotels. He explained that many tourists are opting for these unlicensed options, often encouraged by personal connections or recommendations from friends.

"We found that these tourists stay in illegal accommodations," he noted during a recent meeting at the Bali Tourism Office. "This not only distorts data but also significantly harms legitimate tourism businesses."

Many guests may be unaware that the accommodations they choose lack legal standing, and as a result, hotels are forced to compete with these illegal operators. Marcus indicated that, while some of these non-registered lodgings may not offer significantly lower prices, they often tout increased privacy and a different experience.

Impact on Legal Hotels

The spread of illegal accommodations is impacting the hotel industry’s revenue streams, forcing many operators to lower their room rates to remain competitive. "This decline in occupancy is very detrimental, as it forces establishments to reduce prices, impacting overall profitability," Marcus explained.

Call for Government Action

PHRI Bali is urging the provincial government to take decisive action to regulate illegal accommodations. Marcus emphasized the need to enforce laws that protect registered hotels, stating, "It is clear that legally operating accommodations, which contribute significantly to the economy, are disadvantaged by those that operate outside the law."

In response to the ongoing crisis, the Bali Provincial Tourism Office (Dispar) has initiated a coordination meeting involving district and city tourism offices, as well as various accommodation associations. The goal is to thoroughly investigate the reasons behind the declining hotel occupancy rates and identify corrective measures.

Tjok Bagus Pemayun, Head of the Bali Tourism Office, mentioned that this investigation aligns with directives from the Ministry of Tourism to better understand and address the ongoing situation.

As the Balinese economy closely ties to its tourism industry, stakeholders hope that effective measures will soon be implemented to address the issues surrounding illegal accommodations, ensuring a more sustainable future for the region’s hospitality sector.

With a combination of heightened efforts to regulate lodging options and increased awareness among tourists regarding the benefits of booking through legal channels, the hope remains that Bali’s hotel occupancy will return to healthier levels.