Bali’s hospitality market remains one of the most attractive investment destinations in Southeast Asia. Yet acquiring a hotel here is far more complex than a simple sale and purchase. It’s a multi- layered legal and commercial process that requires strategic planning, regulatory precision, and a deep understanding of Indonesia’s local compliance landscape.
At Schinder Law Firm, we have guided countless investors through the full cycle of hotel acquisitions—from the first conversation at the negotiation table to the final stage of ownership registration. Below, we outline the key stages every investor should understand before entering Bali’s hotel market.
- Negotiation & Confidentiality: Setting the Foundation
Every successful acquisition begins with open, strategic dialogue between the investor and the hotel owner. At this early stage, the parties typically discuss the investment value, transaction structure (asset vs. share acquisition), ownership model, and licensing requirements.
Before any sensitive information is shared—such as financial statements, tax records, or ownership documentation—both sides should sign a Non-Disclosure Agreement (NDA) to ensure confidentiality and protect commercial integrity.
This step is not a mere formality—it builds the foundation of trust and allows negotiations to progress transparently.
- Legal Due Diligence: The Critical Phase
Legal Due Diligence (LDD) is the most decisive stage of a hotel acquisition. It’s a comprehensive legal review that uncovers any hidden risks associated with the target property or operating entity.
A full LDD covers:
- Corporate status and shareholding structure
- Land legality (titles, boundaries, certificates) and building permits (IMB/PBG)
- Tourism and operational licenses (TDUP, NIB, hotel classification)
- Contracts and liabilities (management agreements, vendor and lease contracts)
- Employment and labor law compliance
- Tax status and potential disputes
The results are summarized in a Legal Due Diligence Report and an accompanying Legal Opinion, outlining red flags and mitigation strategies. This empowers investors to make informed decisions—whether to proceed, renegotiate, or walk away. - Structuring the Deal: Letter of Intent & Key Terms
If due diligence findings are favorable, the parties move into formal negotiation.
At this stage, they define the purchase price, payment terms, assumption of liabilities, transfer mechanism, and post-acquisition arrangements such as brand continuity or management transition.
These understandings are documented in a Letter of Intent (LOI) or Heads of Agreement (HOA)—non-binding documents that demonstrate mutual commitment and pave the way for final agreements.
- Execution & Notarial Signing
The transaction is then formalized through binding legal instruments:
- Share Purchase Agreement (SPA) for share transactions
- Asset Sale Agreement (ASA) for asset-based acquisitions
Depending on the deal’s structure, additional agreements—such as a Shareholders Agreement or
Hotel Management Agreement—may also be prepared.
Under Indonesian law, a Notary Public shall issue a Deed of Shareholders’ Resolution, which serves as the official instrument to validate the transfer of ownership of the Company as the owner of the hotel. In the case of land transactions, the Land Deed Official (Pejabat Pembuat Akta Tanah or PPAT) shall execute a Deed of Sale and Purchase of Land to formally record the transfer of land ownership, which will subsequently be processed for the title transfer at the relevant Land Office.
- Post-Acquisition Integration: The Often-Overlooked Stage
Completion does not mark the end of the process—it marks the beginning of integration.
New owners must align organizational structure, HR systems, accounting standards, and operating protocols with local compliance rules.
Equally important is managing relationships—with staff, vendors, and guests—to ensure operational continuity and maintain the hotel’s reputation.
Proper documentation at this stage ensures full recognition of ownership under Indonesian law and protects long-term business stability.
- The Schinder Advantage
Schinder Law Firm offers a one-stop legal solution for hotel investors in Bali and across Indonesia. Our expertise includes:
- Comprehensive Legal Due Diligence
- Deal Structuring & Negotiation Support
- Licensing & Regulatory Compliance
- Post-Acquisition Integration
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author:
Dewi Susanti