Indonesia to tighten licensing for unregistered hotels and villas in Bali and Jakarta
The Ministry of Tourism of Indonesia has also introduced a new set of regulations to enforce more stringent licensing criteria for accommodation providers due to the revelation via the Indonesian Government’s mapping initiative that many thousands of accommodation properties listed on online travel agencies (OTAs) are operating without being registered as legitimate businesses, especially in Bali.
These regulations provide greater clarity regarding acceptable business practices; enhanced compliance standards; enhanced mechanisms for monitoring compliance and more significant administrative penalties under the risk-based licensing framework currently in place within Indonesia. All accommodation providers must obtain valid operating licenses and appropriate business classifications by the end of March 2026.
Addressing Market imbalance
According to Minister of Tourism, Widiyanti Putri Wardhana, the intent behind this regulation is to return the accommodation sector back into balance – not to through limiting the growth of the Online Platform Industry.
Additionally, she stressed, licensing is broader than just compliance with regulations and relates directly to issues such as safety, professionalism and accountability for taxes, all of which are fundamental components of sustainably developing tourism to the country.
The Government compiled data illustrating the significant gap that exists between the number of properties listed on OTAs and those properties that have been properly registered. In Bali, there were over 29,000 units of non-hotel accommodation properties listed online for guests yet only an estimated 14,500 of these properties had been registered with the national business registry.
In Jakarta there were an estimated 5,000 non-hotel accommodation properties listed with OTAs yet only approximately 1,500 or approximately 28% of these properties had been issued valid licenses.
According to Amnu Fuadiy, Assistant Deputy for Sustainable Tourism Business Management at Indonesia's Ministry of Tourism, these discrepancies between OTA (online travel agent) registrations and governmental records present numerous risks. Some of these risks include unreliable government data; an imbalance between the level of competition among compliant operators and those who are not; possible safety risk to guests; disrupted income collection and/or tax income for regions; and issues related to anticipated revenues from tax collection related to tourism.
Deadlines and compliance will be enforced by this new policy through the issuance of formal notices (issued in December 2025) to OTAs requesting that they assist their merchant partners in obtaining licences via the OSS (Online Single Submission). This system serves as Indonesia's digital business registration portal.
Despite the expectation that many small independent operators will have difficulty complying with administrative issues, the Indonesian government has implemented support measures to assist these operators in complying with their respective licence requirements. Support measures include licensing education programs, data verification initiatives and coaching clinics aimed at assisting business owners with navigating the OSS process and identifying the appropriate types of business classifications as required.
The stakeholders within the hotel and accommodation industry are generally excited by the enhanced regulatory push but are requesting a uniform application across all regulatory bodies. The effectiveness of the existing regulations will be dependent upon the successful implementation of inspections at all locations by local regulatory agencies (i.e. socialisation). As such, the Head of Government and Organisation Relations at the Bali Hotels Association (Fransiska Handoko) has indicated that there are two key factors to support effective compliance - ongoing field inspections and continued socialisation.
Vice Chairman of the PHRI Bali Chapter (I Gusty Ngurah Rai Suryawijaya) stated that as a result of the application of licenses (to do business) there should also be a re-evaluation done of rules surrounding foreign investment within Indonesia's accommodation sector. There should be clear distinctions drawn between segments that can be occupied by foreign investors and those that should be Virginia-domiciled.
Chairman of the Bali Villa Association (Putu Gede Hendrawan) noted that there were functional issues with the OSS system (All in One) related to the inability of private residences or apartments to correctly correspond to a "Villa" classification as established operational standards. As a result, BA is preparing a recommendation to the Ministry of Tourism and Creative Economy to implement a more precise “villa” classification for the OSS system.
Sustaining Sustainable Tourism
According to the Ministry of Tourism, this updated framework supports service quality, guest safety and fair competition in the already rapidly growing accommodation sector of Indonesia. As online listings and licensed properties are placed closer together, a more transparent and accountable tourism industry will emerge, thereby helping to develop long-term sustainable practices in Bali and Jakarta and promote local revenue generation and consumer trust.
