Airbnb vs Long-Term Rentals: Profitability in Indonesia

Published on May 3, 2026 and written by Cyril Jarnias

Airbnb vs. Long-Term Rentals in Indonesia: Which Strategy to Adopt?

In a constantly evolving real estate market, choosing between Airbnb and long-term rentals can be complex for investors looking to maximize their returns in Indonesia.

This country, rich in cultural and tourist diversity, offers varied prospects depending on the region, turning the profitability challenge into a captivating puzzle.

This article provides a detailed comparative analysis by city, examining key factors such as occupancy rates, potential income, and local regulations.

Whether you are an experienced investor or a curious newcomer, discover how to optimize your return on investment by choosing the rental strategy that is most advantageous for each Indonesian destination.

Analysis of Short-Term Rental Yields in Indonesia

Bali, Jakarta, and Yogyakarta are among the main Indonesian cities favored for short-term rentals, each presenting specific dynamics in terms of rental yield.

Occupancy rates and revenues vary greatly by city. Bali stands out due to sustained international tourist demand, a high number of booked nights per year (234 nights on average), and significantly higher annual profitability compared to Yogyakarta, where the market is more localized and seasonal.

Comparison with Long-Term Rentals

• Long-term rents in Indonesia generally offer income stability but remain lower than the gross potential of short-term rentals in tourist areas like Bali.
• For reference:
  • In Bali, a long-term apartment can generate between IDR 5–10 million/month ($300–600 USD), resulting in an annual income well below that of the average Airbnb.
  • In Yogyakarta, the differential still favors short-term rentals despite less consistent demand.
• Seasonal Variations: Short-term rentals experience marked fluctuations depending on the month. For example:
  • Most profitable month in Bali: August
  • Most profitable month in Yogyakarta: December

Factors Influencing Attractiveness

• International and Local Tourism: The constant influx of foreign tourists particularly favors Bali; major cultural events benefit Yogyakarta more.
• Local Events: Religious or cultural festivals create occasional peaks across the country.
• Market Trends & Regulations: Although local legislation remains relatively lenient towards Airbnb in these regions, it can change quickly.

List of Main Advantages for Short-Term Rentals:

• Higher potential income
• Flexibility in using the property
• Ability to adjust rates to demand peaks

List of Major Challenges:

1. High competition among hosts (especially in Bali)
2. Low season can heavily impact occupancy rates
3. Need for active management (frequent check-in/out, cleaning)
4. Potential future regulatory tightening

Opportunities & Challenges

Short-term rentals in Indonesia — especially in tourist hubs — offer attractive yields compared to traditional rentals, thanks to tourism dynamism and high daily rates during peak seasons. However, this investment involves increased daily management and significant sensitivity to local and global tourism market fluctuations.

In summary, investing in short-term rentals often yields a better return on investment than long-term rentals in sought-after areas like Bali or certain lively neighborhoods of Jakarta/Yogyakarta; however, this also comes with higher volatility linked to tourism cycles and potential changes in national or regional regulatory frameworks.

Good to Know:

Bali, Jakarta, and Yogyakarta are emerging as key destinations for short-term rentals in Indonesia, with Bali leading due to its high tourist traffic. Average occupancy rates there often reach 70% with attractive daily rates, partly thanks to cultural events and the island’s international popularity. In Jakarta, although the cost of living is higher, demand remains strong, supporting attractive gains during periods of business mobility. Yogyakarta, meanwhile, attracts travelers with its historical richness, often with lower Airbnb rates but compensated by a stable occupancy rate. Comparatively, long-term rentals offer less economic stability than the lucrative peaks of high season for Airbnb but ensure a more constant income stream less dependent on tourist influx. Investing in short-term rentals offers more opportunities during the high season, but challenges remain due to seasonal fluctuations and increased competition, making trend analysis and adaptability key to maximizing profitability.

Comparison Between Airbnb and Long-Term Rentals in Terms of Profitability

The key criteria influencing the profitability of short-term rentals (STR) via Airbnb compared to long-term rentals (LTR) in Indonesia include occupancy rate, operating costs, seasonal variations, the regulatory environment, and tourism trends. The analysis below focuses on Jakarta, Bali, and Yogyakarta.

Comparison of Performance Indicators

*Estimate based on average monthly rents for furnished apartments; actual amount varies by size and location.

Key Criteria Differentiating Profitability

Average Occupancy Rate

STRs show more volatile and often lower occupancy than LTRs but compensate with a higher daily price.

• In Bali: average Airbnb occupancy at 64%, with strong seasonality — peak in August.
• In Jakarta: median rate around 37% for standard listings; up to 78% for top-tier.
• In Yogyakarta: low average occupancy (26%) despite some high-performing superhosts.

Operating and Maintenance Costs

STRs involve:

• Recurring professional cleaning fees
• Increased wear and tear on furniture
• High administrative costs (frequent check-in/out)
• Platform commissions (~15%)
• Dynamic pricing management

LTRs are less costly in daily management but can generate more expenses during tenant turnover or if the property remains vacant.

Seasonal Variations

Strong monthly fluctuation in Bali where August is the most profitable month; a clear drop during the low season with monthly revenues varying between ~$1,500 and ~$2,400.

In Jakarta, June offers the highest ADR while occupancy peaks in August, proving that a dynamic pricing strategy is essential in this urban market.

Local Regulations

• Bali: relatively permissive legislation towards Airbnb but sometimes requires a “Pondok Wisata” permit to legalize certain commercial operations — fluctuating regulations depending on tourist districts.
• Jakarta & Yogyakarta: increasing regulation aimed at limiting Airbnb in certain residential areas; stricter tax compliance checks. Some buildings explicitly prohibit any tourist subletting.

Quick List of Regulatory Impacts:

• Need for a specific license in several Balinese areas
• Increased risk of fines or Airbnb account suspension if local rules are not followed

Influence of Tourism Trends

International tourist demand directly fuels STR performance, particularly noticeable in Bali where over 39,000 active listings were recorded in July 2025. During off-peak periods or major health/political shocks, this market becomes highly competitive or even saturated.

In university cities like Yogyakarta or metropolises like Jakarta, local/business clientele sometimes takes over during international low seasons.

Indonesian Owner & Tenant Preferences

Summary List:

Owners:

• Often prefer LTR for income stability despite lower net yield;
• Growing attraction to Airbnb motivated by high gross yield potential, especially near major tourist sites;
• Concerns related to increasing legal/tax risk.

Tenants:

• Domestic market prefers the security/stability of long-term rentals;
• Young travelers/expats readily opt for flexibility/short-term rentals, especially via recognized digital platforms;

Comparative Summary of Potential Net Profit

Annualized net profit is generally higher with Airbnb/STR in ultra-tourist areas when well-managed AND occupied (>60%)… But it inevitably comes with increased risks related to strong variations in occupancy rate/seasonality as well as a generally higher operational cost compared to the traditional long-term model guaranteeing budget stability.

Key Takeaways

The relative profitability between short-term vs. long-term rentals mainly depends on:

• Geographic positioning,
• Operational efficiency,
• The local regulatory environment,
• Regional tourism dynamism.

Good to Know:

In Indonesia, Airbnb rentals often show higher profitability than long-term rentals, especially in tourist cities like Bali where occupancy rates can reach 80% during the high season, compared to 60% in Jakarta and 55% in Yogyakarta. However, operating costs, including cleaning and daily management, can account for up to 20% of monthly revenue for Airbnb, compared to about 10% for long-term rentals. Local regulations, particularly in Bali, sometimes restrict short-term rentals, impacting their profitability. While long-term rentals offer income stability and fewer seasonal fluctuations, Airbnb benefits from tourist fluctuations, especially during periods of high demand. Net monthly income in Bali for Airbnb can exceed IDR 8 million, compared to IDR 5 million for long-term rentals. Owners must also consider the preferences of Indonesian tenants, who are often more inclined towards extended stays where trust is paramount.

Choosing Between Airbnb and Long-Term Rentals: Advantages and Disadvantages

Comparison: Airbnb vs. Long-Term Rentals in Indonesia

List of Main Advantages of Airbnb:

Major Disadvantages:

Advantages of Long-Term Rentals:

Disadvantages:

Specific Comparisons by Analyzed Indonesian Cities:

Bali

Jakarta/Yogyakarta

Impact of Ancillary Fees:

Comparative List of Recurring Charges

Airbnb:

Long-Term:

Influential Local Regulations:

Key Regulatory Points

Bali

Short-term rentals are locally regulated; a specific license (“Pondok Wisata” for villas) may be required, subject to fines/legal fees if not complied with. Some areas explicitly prohibit mixed residential/tourist use without prior authorization.

Jakarta

Restrictions periodically tightened in certain residential areas aimed at limiting “disguised hotels.” Systematically check with a notary/local real estate agent before launching a short-term rental activity.

Concrete Examples Illustrating Each Point

⛔️ Key Takeaway: The choice between Airbnb & long-term rental depends closely on the desired investor profile (maximum return vs. security/stability), as well as the urban & regulatory specificities of each chosen Indonesian city.

Good to Know:

In Indonesia, opting for Airbnb allows you to capture higher income potential thanks to daily rates, although these are subject to seasonal fluctuations, particularly pronounced in Bali. In Jakarta, the stability of long-term rentals offers less financial security compared to the risk of Airbnb vacancy. Daily management for Airbnb can be intensive, especially with frequent arrivals, while long-term rentals require less direct oversight but generate significant maintenance costs. In cities like Yogyakarta, local rules sometimes restrict short-term rentals, thus limiting the use of Airbnb. Examples from Surabaya show that long-term leases often involve guaranteed rents, unbreachable by seasonal variations. Operational costs, impacted by regulations, and distinct administrative requirements between cities, should also be considered to optimize the investment.

Cyril Jarnias

Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.

On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.

Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.

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