Iran War Impact Threatens Gianyar's Regional Revenue as Hotel Occupancy Slows by 2 Percent

Local government revenue (PAD) for Gianyar Regency is predicted to decline in May 2026 due to the cancellation of international flights to Bali beginning in April 2026 as a consequence of the United States-Israel conflict with Iran.

“The cancellation of foreign tourist departures from Europe to Bali is occurring in April 2026. However, it will have an impact, because if foreign tourists do not arrive in April, there is no revenue,” said Gianyar Regent I Made Agus Mahayastra following a plenary session at the Gianyar Regional Legislative Assembly office on Tuesday (10 March 2026).

Mahayastra stated that although a decline in PAD in the tourism sector is predicted, the situation is not severe. This differs from the situation during the COVID-19 pandemic that affected Bali six years ago.

Therefore, there are no plans to relocate or refocus the budget allocation for programmes of the Gianyar Regency Government. “This is different from the COVID-19 era, when the entire world was in lockdown,” Mahayastra said.

Mahayastra stated that Gianyar’s PAD situation remains stable at present, with PAD increases recorded from January 2026 onwards.

PAD from hotel and restaurant taxes alone increased by Rp 2 billion, rising from Rp 102 billion in January 2025 to Rp 104 billion in January 2026.

PAD from tourism levies also showed the same increase. Tourism levy revenue was Rp 114 billion in February 2025, increasing to Rp 116 billion in February 2026.

“The March trend (PAD increase) remains positive to date,” he said.

Meanwhile, Mahayastra assured that Gianyar residents currently employed in several Arab countries remain safe, with no reported issues.

“This includes the Middle East. There are no (Gianyar residents) who have become victims,” Mahayastra said.

Although the situation remains secure, Mahayastra acknowledged he has not repatriated them, as the repatriation of all Indonesian citizens in the Middle East region remains the responsibility of the central government.

“Evacuation is a matter for the central government,” he said.

Hotel Occupancy Slows by 2 Percent

Hotel occupancy in Gianyar is predicted to slow by 2 percent due to the impact of the conflict. This was stated by the Head of the Gianyar Hotel and Restaurant Association (PHRI), Gede Paskara Karilo.

“Predictions for 2026 are somewhat challenging. We have felt this since the end of 2025, with occupancy not as strong as last year,” Paskara told detikBali on Tuesday.

Paskara stated that occupancy from January 2026 to date has declined by 15 percent, falling below 50 percent with most hotels experiencing only around 40 percent occupancy. It is predicted that during the peak tourism season in June to July, hotel occupancy rates will reach only 2 percent.

The signs are evident, with many hotel rooms available but not matched by the number of tourists staying, particularly foreign tourists. This situation is automatically expected to impact restaurants as well.

“The growth is very slow during peak season. This is because people book during this month. However, due to this war situation, they are postponing,” Paskara said.

Paskara explained that the Israel-US conflict with Iran is not only preventing European foreign tourists from travelling due to the closure of many Middle Eastern airports serving as transit hubs.

The poor economic conditions resulting from the conflict are also causing foreign tourists from Europe and Asia to defer holidays to Bali. The surge in global oil prices caused by the conflict is forcing foreign tourists to prioritise living expenses over leisure spending in Bali.

“People are not just adopting a wait-and-see approach regarding flight cancellations, but also considering economics. Because the war situation is global. Oil prices rise, living costs rise,” he said.

Despite the significant slowdown, Paskara urged all hotel and restaurant business operators not to panic. According to him, hotels and restaurants can still withstand the impact of the Middle East conflict.

“We do not intend to alarm anyone. But the facts are as they are. We have briefed staff at hotels and restaurants to reduce spending and avoid excessive debt,” he said.

There are still some foreign tourists affected by flight cancellations who are stranded in Bali. However, these stranded tourists do not guarantee an increase in occupancy, as alternative flight routes to Europe that bypass the Middle East region remain available.

Additionally, the slowdown in occupancy rates in Gianyar can be used as an opportunity for managers to improve the physical facilities and services of their hotels, so that when the situation returns to normal, the quality of the hotel industry in Gianyar will be better.

“Hotels in Ubud and its surroundings remain secure. We have learned from the COVID-19 experience. We can improve ourselves,” he said.