Illegal Accommodations Widespread Across Indonesia, Not Just in Bali; Can They Be Eradicated?
Jakarta, CNBC Indonesia - The Indonesian Hotel and Restaurant Association (PHRI) has highlighted the ongoing prevalence of illegal accommodations in various regions. This issue poses a significant challenge to the hospitality industry and has the potential to reduce local original domestic revenue (PAD). The phenomenon of illegal accommodation is not limited to Bali but is found in many other parts of Indonesia.
“It is widespread. It is happening almost throughout Indonesia. So, it is not just Bali facing the problem of illegal accommodation,” said PH_RI Secretary General Maulana Yusran to CNBC Indonesia, as quoted on Thursday (4/6/2026).
There has been a long-standing assumption that the regulation of illegal accommodation is entirely the responsibility of the central government. However, the authority for supervision actually lies with local governments, as the oversight of business operations is conducted by regency and municipal governments.
“The local governments must play a major role. This is because the benefits from hotel and restaurant taxes are enjoyed directly by local governments,” he said.
PHRI believes that the existence of illegal accommodation creates inequality for business operators who have fulfilled their licensing and taxation obligations. Furthermore, regions are losing significant potential revenue. In many areas, hotel and restaurant taxes are one of the primary contributors to local revenue.
“Hotel and restaurant taxes are among the largest contributors to PAD in many regencies and cities. Therefore, monitoring illegal businesses is very important,” explained Maulana.
He appreciated the steps taken by the central government through the Ministry of Tourism, which has begun actively encouraging enforcement. However, such efforts are deemed ineffective without the support of local governments.
“The ones who enjoy the benefits are the local governments. Therefore, they must also take a larger role in supervising and regulating unlicensed accommodation,” said Maulana.
For information, the Ministry of Tourism notes that approximately 1,600 tourism accommodation businesses do not yet possess official permits, despite still being marketed on Online Travel Agent (OTA) platforms. The government has asserted that accommodations that have not completed their licensing within the next two months will be removed from platforms starting 1 August 2026.
Minister of Tourism Widiyanti Putri Wardhana stated that this step is being taken to create a more orderly, fair, and sustainable tourism industry, while simultaneously protecting tourists and supporting healthy digital governance.
As part of this restructuring, the Ministry of Tourism is developing a verification system based on Application Programming Interface (API) that will connect with the OSS system and OTA platforms. This system will later be used to automatically verify the legality of accommodations through Business Identification Number (NIB), KBLI, and Business Activity Number (NKU) data.
If the business operator’s data is accurate and valid, the accommodation may continue to be marketed on digital platforms. Conversely, applications will be rejected or removed if they do not meet licensing requirements.
The government aims to launch the API system by June 2027. Once the system is operational, all OTAs will be required to ensure that only officially licensed accommodations can appear on their platforms.
Since March 2025, the Ministry of Tourism, together with local governments and nine OTA partners, has been conducting socialisation and assistance for business operators. As a result, the number of accommodation businesses holding an official NIB increased by 46.5 per cent up to May 2026, with the villa category recording the highest increase of 76.4 per cent.