Published on and written by Cyril Jarnias
Acquiring a Hotel in Indonesia: A Complete Guide
Acquiring a hotel in Indonesia is an exciting and potentially lucrative venture, but it requires careful preparation and a deep understanding of local intricacies. Whether you want to invest in a peaceful Balinese retreat or a trendy hotel in Jakarta, it is crucial to consider various aspects such as:
- Land legislation
- Local business culture
- Current tourism trends
This guide provides a comprehensive checklist to help you navigate this complex process with confidence, ensuring you leave nothing to chance and get the most out of your exotic investment.
Good to know:
Indonesia offers unique opportunities for foreign investors, but it is essential to fully understand the legal restrictions on land ownership before committing.
Overview of the Hotel Market in Indonesia
Indonesia’s hotel industry is experiencing sustained growth, driven by dynamic local and international tourist demand and a rapidly expanding supply. The hotel market is expected to reach USD 3.25 billion by 2029, with an average annual growth rate of over 6%.
Current Trends and Occupancy Rates
- Hotel performance has rebounded strongly after the pandemic, particularly in Bali, where hotels have posted record results for two years.
- In Bali, the occupancy rate generally ranges between 60% and 80% depending on the season; it is lower during the off-peak months (e.g., around March) and peaks during international and local holidays.
- Supply is growing rapidly: in 2021, 29 hotels opened, representing nearly 5,000 rooms; in 2022, even more new establishments opened.
| Year | Number of Openings | New Rooms |
|---|---|---|
| 2021 | 29 | ~4,900 |
| 2022 | 16 | ~3,100 |
Key Tourist Hubs
- Bali: major destination for international leisure (beaches, culture), concentrates the majority of high-end resorts.
- Jakarta: main business hub of the country; frequented mainly by regional or international corporate clientele.
- Lombok, Surabaya, Bandung, Bintan: emerging destinations attracting both local and international tourism.
Top Destinations — Planned New Hotels:
| City/Island | Planned Hotels (Upcoming Projects) | Rooms |
|---|---|---|
| Bali | 23 | ~3,900 |
| Jakarta | 21 | ~3,600 |
| Surabaya | 7 | ~1,700 |
| Bandung | 7 | ~1,300 |
Typical Visitor Profiles & Expectations
- International tourists primarily seek authentic/local experiences (world-renowned cuisine in Bali), beaches/leisure, or cultural travel.
- Business clientele prioritize modern comfort/technological infrastructure in major cities like Jakarta.
- Notable increase in domestic tourism with rising purchasing power.
Main Expectations:
- Personalized/immersive experiences,
- International standards for hygiene/health,
- Sustainable/environmental practices.
Tourism Seasonality
Visitor numbers vary greatly by season:
- Peak during July–August (Northern Hemisphere summer), December–January (holidays),
- Typical low around March-April,
- Seasonality is mitigated in some urban areas due to the MICE segment (Meetings-Incentives-Conferences).
Summary List:
- High season: European/Australian summer + Indonesian school holidays;
- Low season: late March–early April.
Hotel Supply Statistics
Projected distribution for upcoming hotel projects:
| Category | Proportion (%) |
|---|---|
| Four-star hotels | approx. two-thirds |
| Five-star hotels | approx. one-third |
| Mid-range / Budget | Data not specified but strong presence outside major tourist centers. |
About half of the announced hotel inventory will only become operational in several years.
Recent Investments & Their Impact
Investments are driven by:
- Local/international groups primarily developing the high/mid-range segment;
- Growing entry of private equity/family offices/high-net-worth individuals seeking to diversify their real estate assets;
- Continuous improvement of air/road infrastructure facilitating access to secondary hubs;
Notable Effects:
- Overall qualitative strengthening,
- Increased competitive pressure on prices/margins,
- Expected higher valuation in certain emerging secondary markets.
Major Challenges
- Potential oversupply in certain segments/locations;
- Issues related to public health/responsible tourism;
- Possible infrastructural/environmental degradation due to overtourism, especially in Bali;
- Heightened regional competition against other Asian hubs;
Opportunities for Investors
- Dynamic market driven by stable demographic/touristic growth.
- Strong potential in secondary cities/alternative destinations less saturated than Bali/Jakarta.
- Regulatory support through tax incentives/targeted public investments in sustainable tourism.
- Growing demand for eco-friendly accommodations integrating green or digital technologies.
The favorable economic context, combined with a positive evolution of the regulatory framework, is therefore creating an attractive range of opportunities in both acquisition/repositioning and new development.
Good to know:
The Indonesian hotel market has seen a post-pandemic upturn with rising occupancy rates, especially in Bali and Jakarta, where tourism has rebounded significantly. The islands of Bali, Jakarta, and Lombok remain major tourist hubs, attracting mainly international tourists seeking luxury and rich cultural experiences. Seasonality is pronounced, with a peak during the dry season from May to September. Approximately 18,000 hotel establishments dot the archipelago, ranging from luxurious complexes to budget establishments, with a high concentration observed in tourist cities. The increase in investments in the sector is notable, with many projects focused on ecotourism and sustainable infrastructure, reflecting a growing commitment to sustainability, although this remains a persistent challenge amid increased competition. Investment opportunities, particularly in the mid and high-end segments, are attractive, supported by favorable economic policies, but must be approached with attention to local regulations that can impact returns on investment.
Taking Over a Hotel in Indonesia: Key Steps
Initial Administrative Steps and Obtaining Licenses
To take over a hotel in Indonesia, it is essential to complete several administrative formalities:
- Mandatory Permits and Licenses:
- Investor Stay Permit (KITAS or KITAP)
- Registration of a local company, usually in the form of a PT PMA (foreign capital company)
- Business Identification Number (NIB), obtained via the OSS portal
- Main license for hotel activity (TDUP – Tanda Daftar Usaha Pariwisata)
- Building or renovation permit if necessary (IMB)
- Health certificate and other specific licenses depending on services offered: restaurant license, alcohol sales, environmental and hygiene compliance
| Step | Description |
|---|---|
| KITAS/KITAP | Stay permit allowing the foreign investor to reside in Indonesia |
| PT PMA | Mandatory legal structure for foreign investments |
| NIB | Unique business identification number |
| TDUP | Tourism license specific to hotel establishments |
| IMB | Authorization related to building compliance |
In-Depth Pre-Acquisition Evaluation
It is essential to conduct a comprehensive analysis before any takeover:
- Financial audit: analysis of past financial statements, potential debts, current profitability
- Market study: assessment of local positioning, direct/indirect competition, tourist attractiveness
- Technical inspection: verification of electrical/plumbing/structural installations and their compliance with local standards
Key Points to Examine During the Diagnosis:
- Ongoing contracts with suppliers/service providers
- Environmental and hygiene compliance
- Social history of the staff
Negotiation and Finalization Steps
Practical advice for this crucial phase:
- Establish a clear letter of intent mentioning the proposed price and conditions precedent.
- Negotiate not only the price but also the terms: payment deadlines, conditions precedent related to audit results.
- Draft a precise contract governing the transfer including:
- Effective transfer of shares/operating company/PT PMA
- Guarantee on the absence of hidden debts
- Detailed timeline until the effective takeover
Summary List:
- Letter of Intent / Formal Written Offer
- Thorough legal/financial/land due diligence
- Signing of final contract before an Indonesian notary
Specific Legal Aspects
Particularities related to the Indonesian context:
- Limited direct foreign ownership of land; often requires a local partner or PT PMA structure legally holding the real estate assets.
- Potential obligation for an Indonesian shareholder to hold a minimum stake in certain legal configurations (e.g., minimum 33% in some cases).
- Mandatory compliance with rules regarding the minimum share capital required by the sector.
| Subject | Indonesia Specificity |
|---|---|
| Land Ownership | Impossible for foreigners to purchase directly outside a dedicated structure |
| Shareholding | Often mandatory co-shareholding with a local partner |
| Required Share Capital | High minimum investment |
Ensuring a Smooth Operational Transition
Recommended strategies:
- Retain key personnel during the transitional period; hold individual or group meetings to reassure existing teams.
- Implement an interim plan to ensure all ongoing operations remain stable:
- Logistical/supplier/essential services continuity
- Transparent communication with clients/local partner networks
Practical List:
- Identify strategic employees to absolutely retain
- Establish temporary dual management if possible
- Prepare official communication for clients/suppliers
Renovation & Repositioning Post-Takeover
To maximize profitability after the purchase:
- Audit the general condition, then plan necessary work according to immediate commercial priorities vs. long-term investments.
- Focus on the authentic integration of local cultural elements in the decoration/offer/service to attract an international clientele seeking an immersive experience.
Concrete examples:
- Modernize rooms while preserving traditional Balinese architecture
- Develop partnerships with local artisans/artists
- Adapt the restaurant offering around revisited regional specialties
Renovation/Repositioning Checklist:
- Prioritize customer safety & comfort
- Enhance local cultural identity
- Actively communicate the new image to OTAs/international tour operators
Good to know:
To effectively take over a hotel in Indonesia, start by obtaining the necessary authorizations, such as the tourism operating permit and local building permits. A comprehensive evaluation of the hotel is crucial: conduct a financial audit, analyze the market, and thoroughly inspect the facilities. During negotiations, be attentive to the price and purchase conditions, and have a specialized lawyer draft a transfer contract to secure the agreement. Understand the laws on foreign ownership well, as legal aspects are complex and decisive. Ensure a smooth transition by communicating clearly with staff and maintaining ongoing operations. Consider renovating and repositioning the hotel by integrating local cultural elements to attract international clientele and optimize profitability.
Importance of Due Diligence in Indonesian Hospitality
Due diligence refers to the set of checks and analyses conducted by a potential buyer before purchasing a hotel, in order to secure their investment and avoid unpleasant surprises. In the Indonesian context, it is crucial to ensure legal compliance, profitability, and long-term viability of the establishment, in a sometimes complex regulatory and economic environment.
Key Aspects to Verify During Due Diligence of a Hotel in Indonesia:
| Aspect to Verify | Objective | Essential Checkpoints |
|---|---|---|
| Property Titles | Ensure the seller legally owns the hotel and there are no land disputes | Verification of land certificate, search for mortgages, charges or restrictions, compliance with legislation |
| Regulatory Compliance | Avoid risks of sanctions or administrative closure | Operating licenses, building permits, compliance with environmental standards, tax compliance |
| Financial Health of the Establishment | Assess the profitability and solvency of the hotel | Analysis of balance sheets, income statements, debts, cash flow, working capital requirements |
| Ongoing Litigation | Identify legal risks that could impact the investment | Search for disputes, labor litigation, conflicts with suppliers or clients |
Assessment of Profitability Potential and Position in the Local Market:
- Analysis of operational performance (occupancy rate, average price, operating margin)
- Study of local competition and hotel positioning
- Analysis of Indonesian tourism market trends and growth potential of the area
- Identification of levers for improvement or revenue diversification
Potential Risks in the Absence of Thorough Due Diligence:
- Discovery of significant hidden costs (uncompleted work, undeclared debts)
- Legal problems related to land or regulatory irregularities
- Loss of asset value due to unidentified disputes or poor competitive position
- Risk of administrative closure or financial penalties
Concrete Examples:
- An investor was able to avoid purchasing a hotel whose property title was contested by several heirs, which could have led to years of costly legal proceedings.
- Thorough due diligence allowed another buyer to identify that the target hotel did not comply with local environmental standards, which would have required significant renovation work to meet standards.
- Conversely, investors who conducted complete due diligence spotted an undervalued hotel due to poor management, but with strong repositioning potential. After acquisition, they were able to double revenue in two years through targeted investments and a new commercial strategy.
Important Text to Remember:
Due diligence is not just a formality: it is the main safeguard against hidden risks and allows for optimizing the investment strategy in Indonesian hospitality.
Good to know:
Due diligence, a thorough verification process, is crucial when buying a hotel in Indonesia to secure the investment. It encompasses examining property titles, ensuring they are legitimate and free of disputes, and verifying regulatory compliance to avoid costly violations. The financial health of the establishment must be analyzed to detect potential cash flow problems, while assessing its position in the local market helps estimate its profitability potential. Neglecting this step can lead to undesirable financial and legal surprises. For example, some investors have avoided losses thanks to due diligence revealing unpaid taxes or necessary renovations that were often concealed.
Tourism Statistics in Indonesia and Impact on Hospitality
Recent years have seen rapid growth in tourism in Indonesia, with a clear post-pandemic rebound. In 2024, the country welcomed approximately 13.9 million international visitors, an increase of 18 to 20% compared to 2023; the trend continued in 2025 with already more than 5.44 million arrivals in the first five months. The main nationalities of foreign tourists are China (23.96%), the United Kingdom (28.28%), Singapore (20.04%), South Korea (18.19%), Australia (16.97%), and India (10.92%); the United States and Japan are also well represented.
| Year | Total International Arrivals | Annual Variation |
|---|---|---|
| 2019 | 16.11 M | – |
| 2020 | ~4 M | -75% |
| 2021 | 70 | $75–95 |
| Jakarta | ~65 | $60–80 |
| Komodo Islands | >60 | $55–70 |
National average for the first half of 2025:
- Occupancy rate for classified hotels: above 65%
- National RevPAR: around $80
- Increased profitability, especially in Bali where international visitation remains strong
Summary List of Impacts on Hotel Real Estate:
Opportunities:
- Steady growth in tourist flow
- High potential for high-end projects outside Bali thanks to the “10 New Balis” program
- Strong seasonal rental demand
- Favorable policies for foreign investments via joint ventures or long-term leases
Challenges:
- Restrictive regulations on direct acquisition by non-residents
- Increased environmental pressure in certain highly touristic areas
- Fluctuations related to global health risks
Outlook & Forecasts for the Sector:
- Planned expansion of major airport infrastructure until 2030.
- Priority development in ten new flagship destinations outside Bali/Jakarta (“10 New Balis”).
- Significant acceleration expected in sustainable hospitality: mandatory green certification for new major establishments from end of 2026.
- Official forecast: likely surpassing the pre-pandemic threshold (>16M visitors/year) before the end of 2030.
Key Takeaway
The current dynamic sustainably positions Indonesia among the regional tourism leaders while generating an attractive but demanding context for international hotel investors.
Good to know:
Indonesia has seen a notable increase in its tourism in recent years, with over 16 million international visitors in 2019, mainly from countries like China, Singapore, and Australia. Factors such as government policies favoring e-visas and global tourism promotion campaigns have significantly boosted these numbers, especially in flagship destinations like Bali, which has seen an average hotel occupancy rate often exceeding 70%, and a steadily rising RevPAR. Similarly, in cities like Jakarta and the Komodo Islands, hotel performance is driven by improved transport infrastructure. These trends offer promising prospects in the hotel real estate market, with attractive investment opportunities for foreigners, while also posing challenges such as high competition and the need to align with sustainability initiatives. In the future, tourism development in Indonesia is expected to intensify thanks to infrastructure expansion projects and environmental initiatives, promising continued growth in the hotel sector.
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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.
