PHRI supports government crackdown on foreign OTAs and illegal accommodation

The Indonesian Hotel and Restaurant Association (PHRI) supports the government’s move to regulate foreign online travel agent (OTA) platforms and illegal accommodation to create fair business competition and increase regulatory compliance.

PHRI Secretary General Maulana Yusran stated that legal accommodation operators have long awaited such policies and hope that supervision will be conducted consistently to ensure effective enforcement and business certainty. “We welcome the government’s efforts to regulate wild or illegal accommodation. By illegal, we mean those who do not possess the necessary permits or do not adhere to the standard business classifications (KBLI) required for the accommodation sector,” Maulana said in a statement in Jakarta on Monday.

The government has expressed its seriousness in regulating foreign OTA platforms that do not yet have offices in Indonesia, including Airbnb, Agoda, and Booking.com. The Ministry of Tourism has mandated that accommodation owners must provide their Business Identification Number (NIB) and Indonesian Standard Industrial Classification (KBLI) by 31 June 2026. Failure to comply will result in accommodation being delisted from OTA platforms as of 1 August 2026.

Maulana acknowledged that this issue is not new. Since 2019, PHRI has repeatedly raised concerns with the Ministry of Tourism. In early 2020, there were attempts to regulate platforms such as RedDoorz regarding the practice of selling boarding houses as daily accommodation.

“We have long voiced this because there is an injustice in the implementation of business licensing, especially since the emergence of many illegal accommodations that are also sold on OTA platforms,” he said.

He also supported the government’s move to encourage foreign OTAs to establish official offices in Indonesia. According to him, foreign OTAs that do not have a Permanent Establishment (BUT) do not fully comply with applicable regulations. For instance, Maulana noted that hotels are disadvantaged because foreign OTAs do not comply with Indonesian tax regulations. Under Law No. 7 of 2021 on the Harmonisation of Tax Regulations (UU HPP), travel accommodation is subject to 11 per cent VAT, yet foreign OTAs pass this tax burden onto hotels.

“It is not fair. The inventory being sold is in Indonesia, but the platform is a foreign legal entity. Consequently, the impact on taxation is clearly different. As business actors, we bear higher costs, while they do not,” he added.

He noted that the negative impacts of foreign OTAs lacking a legal entity in Indonesia touch at least three aspects: losses for hotels as business partners, minimal absorption of local labour due to the lack of domestic operational offices, and the potential loss of state revenue from corporate taxes.

Furthermore, consumer protection has become a focal point. The lack of an official presence in Indonesia makes access to complaints unclear. “If a complaint occurs, consumers have no clear access to customer service or a person in charge in Indonesia. Sometimes there is only one representative, or they only work with consultants rather than an official entity,” he said.

PHRI hopes the government’s steps to regulate these violations remain consistent, as it is key to creating a fair and healthy business climate. He emphasised that addressing this issue cannot be handled by a single ministry; it requires the involvement of the Ministry of Tourism, the Ministry of Trade, the Ministry of Communication and Digital, and fiscal authorities. “We hope this can be regulated promptly. The Ministry of Communication and Digital must be involved, as must the Ministry of Finance, because this relates to taxation,” he concluded.