The tourism anomaly in Bali is beginning to draw serious attention. Despite a recorded increase in foreign tourist visits to the island, hotel occupancy remains unexpectedly low. Industry observers suspect illegal accommodation is at the root of the issue.
The Secretary General of PHRI (Indonesian Hotel and Restaurant Association) Bali, Perry Marcus, revealed during a coordination meeting that the decrease in hotel occupancy might be linked to the proliferation of unregistered accommodation.
According to PHRI Bali data, the average hotel occupancy since the start of 2025 has fallen by around 10–20 per cent, whereas typically, it ranges from 60 to 70 per cent out of the total 150,000 hotel rooms available in Bali.
“The hotel industry in Bali is complaining because guests are quiet. In fact, foreign tourists travelling to the Island of the Gods are increasing. Where do they stay?” said Perry Marcus.
Indonesian Hotel and Restaurant Association: Tourists Absorbed by Illegal Accommodation
The Bali Hotel and Restaurant Association (PHRI) suspects that the main cause of this drop is the surge in illegal accommodation—residential properties converted into hotels or villas that are not officially registered and thus do not pay taxes.
“Finally we found (the answer). It turns out that these tourists stay in the (illegal) accommodations that were mentioned earlier. So, they are absorbed there,” Perry stated during a meeting at the Bali Tourism Office on Monday, 28 April 2025, as reported by Detiknews.
According to Perry, this phenomenon not only distorts data but also significantly harms legitimate tourism businesses. “This is very hitting because with the decline in occupancy, such as data from the Bali Hotel Association, they finally survive by lowering room prices,” he said.
He further suggested that one of the main reasons tourists opt for these unlicensed lodgings is the personal connection with the owners.
“The first thing is actually if we see it, some of them are brought by their friends. So his friend has made accommodation, his other friend is invited to stay there, so the transaction is not there, there (in the country of origin).
“He just said it was his friend. Even though it’s actually a guest, for example,” Perry explained.
Perry also noted that these illegal accommodations often offer privacy as a key selling point, and the pricing is not necessarily cheaper than legal hotels. “In terms of price, it’s not very cheap either. Almost the same. But if we see there are several places that make their privacy higher,” he added.
PHRI Urges Government Crackdown
The PHRI Bali strongly urges the provincial government to take immediate and firm action against illegal accommodations to protect the legal hotel industry, which contributes significantly to the regional economy.
“It is clear that for accommodations or hotels that already have official legality, they must feel very disadvantaged by those that do not have legality or are illegal,” said Perry.
In response to the issue, the Bali Provincial Tourism Office (Dispar) has initiated a coordination meeting with district and city tourism offices, alongside several accommodation associations, to investigate the declining hotel occupancy.
As reported by Kompas, Head of Bali Tourism Office, Tjok Bagus Pemayun, stated that this move was carried out under the directive of the Ministry of Tourism to further examine the accuracy of the circulating reports.
