Bali is still welcoming record numbers of visitors, but not all of them are staying in licensed hotels, villas, or registered accommodation businesses.
Alongside the formal market, a growing number of private villas, guesthouses, apartments, homes, and kos, Indonesia’s rooming or boarding houses, are being offered to tourists for short stays.
This less visible layer of accommodation is often described as shadow inventory. It refers to properties that are available to travellers, but whose business licence, tax status, building use, or operating category may not fully match the way they are being rented.
Is shadow inventory really a problem in Bali?
Yes. The government’s own data shows there is a real compliance issue, although nobody yet knows exactly how big it is.
As of 12 December 2025, the Ministry of Tourism’s I-Par dashboard recorded 2,612 Airbnb accommodations in Bali. Only 476 had been inspected. According to the Ministry of Tourism’s 2025 Performance Report, 242 of those properties had a Business Identification Number, or NIB, while 234 did not.
That means 49.2% of the inspected properties had no NIB.
It does not mean that 49% of every Airbnb or villa in Bali is illegal.
Only about 18.2% of the 2,612 properties in the dataset had been checked. More than 80% had not. The figures tell us that the problem exists, but they do not yet tell us how widespread it is across the island.
Daily-rental kos are part of the picture too
The issue is not limited to villas.
In April 2025, the Badung Regency Government formed a special team to review tourism accommodation after concerns emerged about boarding houses being occupied by foreign visitors and complaints from some hotel operators about weaker occupancy.
On 5 May 2025, officials inspected properties on Jalan Taman Sari in Kerobokan Kelod, North Kuta. The Badung Regency Government reported signs that residences or boarding houses were being used as tourist accommodation.
That matters because it shows the issue is not theoretical. In one of Bali’s busiest tourism areas, homes and kos have already been found operating in the short-stay market.
When does a kos become tourist accommodation?
The rules make an important distinction.
Badung Regional Regulation No. 24 of 2013 defines a rumah kos as accommodation rented for residential use for at least one month, usually under monthly or annual payment arrangements.
Meanwhile, Indonesia’s Law No. 1 of 2022 includes private residences used like hotels within the scope of hotel services for local taxation. That can include houses, apartments, and condominiums offering hotel-style stays.
In simple terms, a room rented monthly as a home is not the same business as a room sold by the night to tourists.
The Ministry of Tourism also defines a guesthouse as a residential building offering daily accommodation to tourists, whether marketed online or offline, under its short-term accommodation business standards.
What matters most is not what the property is called. It is how the property is actually being used.
No NIB does not always mean illegal
This is where the debate often becomes too simplistic.
A property may not have an NIB. It may have an NIB but use the wrong KBLI business classification. It may have zoning or building-use problems. It may not yet be registered for local tax. Or it may have several issues at once.
So a property listed as “without an NIB” should not automatically be labelled illegal in every sense.
That distinction matters, especially when discussing a market as large and fragmented as Bali’s.
Tourists are coming, but hotel occupancy does not always follow
Bali received 6,948,754 direct international tourist arrivals in 2025, up 9.72% from the previous year, according to Statistics Indonesia’s Bali office.
Yet in December 2025, star-rated hotel occupancy stood at 60.88%, down from 63.71% a year earlier. Non-star accommodation recorded occupancy of 39.61%, based on BPS Bali tourism statistics.
By June 2026, Bali was still welcoming 605,013 direct international arrivals in a single month, according to BPS Bali.
The numbers suggest that more tourists do not automatically mean fuller hotels.
A study published in Jurnal Kajian Bali in August 2026 also found that growing demand for villas, homestays, and short-term rentals, including some operating outside formal licensing and taxation systems, has become part of Bali’s accommodation challenge.
But it would be wrong to blame shadow inventory for everything.
Domestic travel, MICE demand, room rates, infrastructure, economic conditions, and changing traveller habits all play a part.
What the evidence does show is that shadow inventory is adding another layer of competition to Bali’s hotel market.
Why can unlicensed stays be cheaper?
Licensed hotels and villas carry costs that go beyond cleaning rooms and serving guests.
They have to deal with business licences, employment rules, safety standards, reporting, environmental requirements, and taxes.
In Badung, the PBJT tax rate on hotel services is 10%, under Badung Regional Regulation No. 7 of 2023.
If two properties sell rooms on the same booking platform but only one carries the full cost of compliance, they are not competing on equal terms.
Economists call this regulatory arbitrage. Put simply, a property may be able to offer a cheaper stay partly because it is not carrying the same regulatory and tax costs as its licensed competitors.
That is why the real issue is not hotels versus villas.
It is whether everyone is playing by the same basic rules.
Bringing more properties into the system also means more tax revenue
Badung’s tax data gives some idea of what formalisation can mean financially.
Between January and May 2026, the local tax authority recorded 1,776 new PBJT hotel-service taxpayers, generating about IDR 16.55 billion in payments in the available dataset, according to Badung Revenue Agency data.
That does not mean all 1,776 businesses had previously been operating illegally.
It does show that bringing more accommodation businesses into the tax system can generate meaningful revenue.
The concern is not necessarily that Bali’s tourism taxes are falling. It is that some tourism income may still be slipping through the tax net.
Bali still does not know exactly how many rooms it has
That may be the biggest challenge of all.
A single property can appear on several OTAs, use more than one listing, trade under a name that differs from its legal entity, and show up differently in licensing and tax records.
Without better data integration, even a simple question becomes surprisingly difficult:
How many commercial rooms are actually being sold to tourists in Bali on any given night?
The Ministry of Tourism is now developing an API-based verification system that will connect online travel platforms with NIB, KBLI, and Business Activity Number, or NKU, data through Indonesia’s OSS system. Full implementation is targeted for June 2027, according to the Ministry of Tourism’s digital verification documentation.
The Ministry has also launched an accommodation business verification portal asking operators to submit their NIB, KBLI, and local taxpayer details.
The direction is clear. Instead of only finding problems after a property is already taking bookings, authorities want to check compliance earlier.
So, are illegal villas and daily-rental kos hurting Bali’s hotels?
They are adding competitive pressure, but they are not the only reason some hotels are struggling with occupancy.
What we know so far is clear. Thousands of Bali accommodation listings appear in government-monitored datasets. Nearly half of the units inspected in one dataset did not have an NIB. Homes and kos have been found operating as tourist accommodation in Badung. At the same time, strong tourist arrivals have not always translated into stronger hotel occupancy.
The real question is not whether Bali should have hotels, villas, guesthouses, or alternative stays.
It is whether every room sold to tourists is operating under the same basic rules.
If Bali can connect property records, owners, NIB, KBLI, zoning, tax registration, and OTA listings in one verified system, shadow inventory will become much easier to identify.
And once it becomes visible, it also becomes easier to regulate, tax, and bring into Bali’s formal tourism economy.
If you are a hotel or resort owner and are beginning to experience challenges related to this issue, it is advisable to consult a hotel management or operations expert as early as possible, before these challenges develop into a more serious impact on your business.
FAQ
Is Airbnb illegal in Bali?
No. Airbnb is a marketplace. The legality of each property depends on its licensing, tax status, business classification, and compliance.
Are all villas without an NIB illegal?
Not automatically. No NIB is one type of compliance issue, not proof of every possible violation.
Can a kos rent rooms to tourists by the day?
In Badung, a kos is defined as residential accommodation rented for at least one month. Daily tourist stays are a different commercial activity and need to follow the relevant accommodation rules.
How many illegal villas are there in Bali?
There is still no single public dataset reliable enough to give a definitive number.
Are illegal villas making Bali’s hotels empty?
Not by themselves. Current evidence points to additional competitive pressure, not a single cause.
Data updated: 25 August 2026.