Bali’s New Airbnb Ban Could Change the Future of Tourism in Indonesia’s Paradise Island

Published on December 5, 2025

Bali, Indonesia’s fabled island paradise, is grappling with a growing conundrum: how to balance an economic boom in post-Covid tourism with overcrowding, environmental degradation, and the lengthening shadow of unregulated, Airbnb-style rentals. With growing concerns about revenue loss and overtourism, the provincial government of Bali weighs a drastic measure-a potential ban on all Airbnb accommodations.

Airbnb Rentals and Their Impact on Local Economy
In recent years, Airbnb-style rentals have gained immense popularity among travelers visiting Bali, offering a cheaper alternative to traditional luxury resorts. This surge has led to a significant shift in the island’s accommodation landscape. The affordability of these unregistered rentals has, in turn, contributed to the erosion of tax revenue from traditional hotels and resorts. Bali’s Governor, I Wayan Koster, emphasized the issue, pointing out that the growing number of Airbnbs on the island directly hampers the government’s ability to fund public services.

Bali’s tax system depends heavily on hotel and resort revenues, but with the rise of unregulated properties, authorities are struggling to track and collect taxes. The impact on Bali’s local economy is becoming more pronounced as foreign arrivals continue to surge, highlighting the need for stricter regulations to prevent further revenue leakage.

Tourism Boom, But at What Cost?
Bali has long been a top destination for international tourists, drawing millions of visitors each year to its stunning beaches, cultural heritage sites, and luxury resorts. However, the island’s charm is being tested by the massive influx of visitors, a phenomenon that became even more pronounced following the post-pandemic rebound in travel.

The tourism boom has exacerbated existing problems such as traffic congestion, overbuilding, and environmental strain. Bali’s infrastructure, once tailored to a modest number of tourists, is now struggling to accommodate the sharp increase in arrivals. The island is grappling with overcrowded roads, waste management issues, and the depletion of its natural resources. Airbnb-style rentals, being largely unregulated, have added to this burden by contributing to the overdevelopment of residential areas and unsustainable land use practices.

Government’s Response to Unlicensed Operators
To address these issues, the local government has started implementing stricter regulations aimed at curbing the negative effects of overtourism. One of the most significant measures introduced is a new levy on international visitors. This tax aims to ensure that the economic benefits of tourism are reinvested into the island’s public infrastructure, environmental management, and social services.

Bali authorities have also ramped up enforcement efforts against unlicensed operators, which includes those offering Airbnb accommodations without proper permits. According to the Governor’s office, more than 2,000 hotels and villas are operating illegally in Bali, and these businesses will face significant penalties. In total, roughly 16,000 lodging units are being marketed online through various platforms, including Airbnb, competing with the 378 hotels and resorts that are members of the Indonesian Hotel and Restaurant Association (IHRA).

The Airbnb Dilemma: Economic Growth vs. Sustainable Tourism
For Airbnb, Bali represents a critical part of its international expansion strategy. The company has been actively investing in regions like Asia and Latin America, with local payment methods introduced in several countries, including Indonesia, as part of its efforts to expand the market. The potential ban in Bali could be a major blow to Airbnb’s growth ambitions, particularly as the island represents one of its largest markets in Southeast Asia.

While Airbnb’s model has provided affordable accommodation options for tourists, the issue of regulation remains a thorny subject. The platform’s rapid expansion in Bali has led to a sharp rise in short-term rental properties that operate without the same oversight as traditional hotels. These properties, often marketed online as luxurious villas and guesthouses, are contributing to the growing problems of overbuilding and overtourism. If Bali follows through with the ban, it would mark a significant shift in the global hospitality landscape, particularly for Airbnb’s strategy in Southeast Asia.

Looking Ahead: What Does the Future Hold for Bali’s Tourism Industry?
The proposed Airbnb ban in Bali is just one aspect of the broader challenge of balancing tourism growth with sustainable practices. As the island seeks to regain control over its tourism sector, it will need to weigh the economic benefits of attracting millions of visitors against the social and environmental costs. The introduction of a new levy on international visitors, stricter enforcement on unlicensed operators, and the proposed ban on Airbnb could all play pivotal roles in shaping the future of Bali’s tourism industry.

The ultimate question for Bali’s authorities will be how to maintain its status as a top destination for travelers while mitigating the negative impacts of overtourism. While the island’s natural beauty and cultural richness will continue to attract tourists, the government must prioritize sustainable tourism practices that ensure long-term economic and environmental health for both locals and visitors.

Bali at a Crossroads

With Bali increasingly feeling the strain of overtourism and unregulated private accommodations, a potential ban on Airbnb will be key to defining the future of tourism to the island. The move may be unpopular, but it is a growing indication of how much tighter controls and rebalanced tourism management are needed. Bali, referred to as the “Island of the Gods,” now comes to a crossroads: how will it guard that mystique while managing the influx of visitors from around the globe?