Tourism in Bali Faces Shift as Government Moves to Regulate Airbnb Rentals

Published on December 5, 2025

Bali, one of the world’s most popular travel destinations, is considering a bold move to ban Airbnb operations on the island. Wayan Koster, the Governor of Bali Province, has expressed concerns that Airbnb and similar short-term rental platforms are not contributing adequately to the local economy. This potential ban is part of a broader effort to regulate tourism businesses and ensure that Bali’s tourism sector supports local communities and follows the island’s sustainability goals.

As Bali experiences a surge in international tourism, particularly post-pandemic, the local government is seeking ways to balance the growth of the sector with the well-being of its residents. With a reliance on tourism being a significant part of Bali’s economy, the government is also exploring ways to ensure that tourism dollars benefit the local economy more directly, rather than being channelled away by global corporations.

Bali’s Dependence on Tourism and the Rise of Short-Term Rentals

Bali’s tourism sector has long been a driving force of the island’s economy, drawing millions of visitors annually to experience its stunning beaches, cultural landmarks, and world-class resorts. The COVID-19 pandemic significantly disrupted tourism, but as international travel has rebounded, Bali’s tourism numbers are growing again.

One of the biggest contributors to this tourism boom has been the rise of platforms like Airbnb, which allow homeowners and property managers to rent out rooms or entire homes to tourists. These platforms have become popular among travelers seeking affordable and unique accommodations, but there are growing concerns about their impact on local housing markets, communities, and traditional tourism businesses.

The surge of short-term rentals facilitated by Airbnb and similar platforms has led to a decrease in available housing for locals, with many properties that were once rented to residents now serving as vacation rentals. Critics argue that this shift is driving up rental prices and making it difficult for local Balinese families to afford to live in areas that are popular with tourists.

Governor Koster’s Concerns About Economic Impact

Governor Wayan Koster has been vocal about the negative impacts that platforms like Airbnb are having on the local economy. While Bali’s tourism industry is flourishing, Koster has raised concerns that much of the revenue from short-term rentals is not staying within local communities.

Airbnb, and similar platforms, take a percentage of rental income, and the profits often flow back to international companies rather than staying within Bali’s economy. Additionally, these platforms bypass some of the regulations that apply to traditional hotels and resorts, such as taxes and licensing fees, leading to complaints from local businesses that are struggling to compete on an uneven playing field.

Koster has stated that the government is reviewing existing regulations to ensure that all tourism businesses, including Airbnb hosts, contribute more significantly to the local economy. One of the key issues at the heart of the debate is the perceived lack of contribution from Airbnb to the island’s tax base, which funds essential services like infrastructure, healthcare, and education.

Potential Solutions and Proposed Regulation Changes

To address the concerns over Airbnb’s impact, the Bali government is considering several regulatory changes aimed at creating a fairer and more sustainable tourism model. One proposed measure is to introduce new taxes on short-term rentals, ensuring that Airbnb hosts pay the same taxes and fees that traditional hotels do. This would help level the playing field and ensure that the revenue from tourism is directed back into the local economy.

Additionally, the government is exploring ways to regulate the number of properties available for short-term rentals in certain areas. By limiting the number of properties rented out to tourists, the government aims to reduce the strain on the local housing market and preserve the character of traditional neighborhoods that have been affected by the influx of tourists.

Impact on Bali’s Tourism Market and Local Businesses

If the proposed ban on Airbnb or stricter regulations go into effect, it could lead to significant changes in Bali’s tourism market. While some tourists may be disappointed by the loss of affordable accommodation options through platforms like Airbnb, the government is positioning these changes as a way to protect the island’s cultural integrity and ensure that the economic benefits of tourism are more widely distributed.

Local businesses, particularly hotels, guesthouses, and resorts, could benefit from the regulation of short-term rentals, as they would face less competition from unregulated listings. This could lead to an increase in tourism revenue for businesses that comply with local laws, taxes, and licensing requirements.

Additionally, the government’s push for more sustainable tourism practices could enhance the reputation of Bali as a responsible travel destination. By focusing on local businesses, cultural heritage, and sustainable tourism initiatives, Bali could continue to attract high-value visitors who prioritize cultural immersion and sustainability.

The Future of Bali’s Tourism Industry

The debate over Airbnb and short-term rentals highlights the tension between the economic benefits of tourism and the preservation of local culture and community life. As Bali continues to welcome millions of international visitors, the government’s challenge will be finding a balance that allows for continued growth in the tourism sector while protecting the island’s residents and environment.

The outcome of this debate will likely shape the future of Bali’s tourism industry. If the proposed regulations are implemented, Bali may become a model for other popular tourism destinations grappling with the same issues of over-tourism and the role of short-term rental platforms. As Bali navigates these challenges, it is clear that the island is working to create a more sustainable tourism model that benefits both visitors and residents.

Conclusion: Shaping a Sustainable Future for Bali’s Tourism

Bali’s efforts to regulate short-term rental platforms like Airbnb reflect the ongoing evolution of the island’s tourism industry. By addressing concerns over economic contributions and housing affordability, the government is aiming to create a more equitable and sustainable tourism environment. The proposed changes could have far-reaching effects on both tourists and local businesses, but they are part of a larger effort to ensure that Bali remains a vibrant, thriving destination for years to come.