Bali Won't Go Ahead With Hotel Building Ban

Newly re-elected Bali Governor Wayan Koster has decided to abandon the proposed moratorium on building new hotels and villas. Instead, he has pledged stricter regulations to manage the growth of tourism accommodations.

“There is no need for a moratorium. What’s needed is stricter control,” Koster said at a recent press conference in Seminyak.

The proposed ban had been rooted in concerns about overtourism and environmental degradation. Bali’s rapid development has transformed areas like Cemagi, North Kuta, where rice fields have given way to buildings.

Former officials had proposed a temporary halt on new construction in key resort areas such as Canggu, Seminyak, and Nusa Dua to preserve Bali’s landscapes and assess its carrying capacity for sustainable tourism. The moratorium had support from the Bali Tourism Board, emphasizing the need to regulate tourism infrastructure and protect the environment.

Ban Alternative: Stricter Regulations

The governor dismissed the moratorium as unnecessary, asserting that stricter enforcement of existing regulations can achieve the same goals.

Koster has yet to detail the specific actions, but hinted at a new Provincial Decree to regulate property ownership, particularly by a foreign national.

“Yes, I will continue to permit the building of villas and hotels. But the rules will be strict,” Koster added.

However, Bali’s construction boom has often been accompanied by weak enforcement of spatial planning laws, leading to unchecked building in ecologically sensitive areas.

Gary Bowerman, a tourism and consumer analyst focused on Asia, noted that President Prabowo’s support for a second Bali airport in the north and expansion of tourism and lifestyle sectors reshaped the landscape. “Major new investment will be needed to support these objectives, which was not deemed possible with any kind of moratorium in place,” he said.

Bowerman also said that the moratorium proposal was very limited in scope, and never had much chance of becoming reality.

Bali’s Overtourism Crisis

Bali’s tourism numbers have surged. In 2024, the island had 6.3 million international tourists, surpassing pre-pandemic levels and its target of 5.5 million visitors. Top source markets included Australia, India, and China, according to data from the Bali Provincial Tourism Office. Bali aims for 6.5 million foreign arrivals in 2025.

Despite the boom, Deputy Governor Nyoman Giri has said hotel occupancy rates remain low, with many accommodations struggling to attract guests even during high seasons.

However, Douglas Louden, senior asset manager at Global Asset Solutions, said, "We are not sure what data is being reviewed here, our research indicated year round occupancies were in excess of 70% and that the destination was performing quite well despite the opening of new inventory."

Louden also noted that the island's infrastructure is struggling to keep up with the influx of tourists, and while plans are under way for a new airport and mass transit system, this will take time to develop and a moratorium on new projects would help operators to drive rates and improve yield.

An earlier Skift report noted that the rate of hotel openings significantly decreased from 2020 to 2023, averaging around 600 keys per year, compared to the 2,600 keys annually between 2009 and 2019. The report had also noted that hotel supply in the island is set to grow by nearly 1,800 rooms in 2024, but the pace is expected to slow.

Bali’s challenges have drawn global attention. The island topped Fodor’s list of destinations to reconsider visiting in 2025 due to overtourism.

Bowerman pointed out that future tourism investment will likely shift to less developed parts of the island. “Travel and tourism investment will likely focus on other areas, not the over-developed and congested south,” he said.

Louden agreed that Bali is at risk of overtourism, especially at key pressure points around the Kuta and the airport. "Proper urban planning is essential," he said.

Mitigating Overtourism: A Broader Strategy

The Indonesian government is working to alleviate overtourism. A new initiative promotes lesser-visited regions like North and West Bali, encouraging exploration beyond the south. Destinations such as Pemuteran, Ijen Crater National Park, and Bromo Volcano are being highlighted.

Pre-Covid, Indonesia launched the ambitious “Ten New Bali Project,” later adjusted to the more realistic “Five Super Priority Destinations” program. Bali’s tourism tax levy, introduced during Koster’s first term, charges international visitors IDR 150,000 (around $10) to fund cultural preservation and environmental protection. However, implementation has been inconsistent, with only 40% of tourists reportedly paying the tax.

“Growth and diversification will be the focus over the next decade to encourage travel flows across islands and countries, not just in heavily concentrated hotspots. Will this succeed? That’s another question entirely!” Bowerman concluded.