Bali, long hailed as one of the world’s premier travel destinations, hosts a vast array of hotels— from serene boutique villas to five-star international resorts. As tourism and foreign capital continue to surge, hotel acquisition transactions on the island have risen sharply, attracting both local and global investors.

Acquiring a hotel in Bali is not merely an act of purchasing real estate—it’s a sophisticated business and legal maneuver that can expand portfolios, unlock long-term returns, and position investors strategically in Southeast Asia’s thriving hospitality market. But every opportunity comes with its own legal and regulatory challenges. Understanding these complexities is essential to turning potential risk into strategic advantage.

1.   Understanding the Legal Framework

Hotel acquisitions in Indonesia are primarily governed by Law No. 40 of 2007 on Limited Liability Companies (“Company Law”), along with specific regulations under the Ministry of Tourism and local government frameworks.

Under the Company Law, an acquisition is defined as a takeover of shares that results in the transfer of control over a company. In the hospitality context, acquisitions usually occur through two methods:

• Share Acquisition: The investor purchases the shares of the company that owns the hotel, thereby taking control of its existing legal entity, permits, and operations.
• Asset Acquisition: The investor buys the hotel’s physical and intangible assets—such as land, buildings, trademarks, and equipment—without acquiring the company itself.

Each method carries distinct legal, tax, and operational implications, and the optimal choice depends on the investor’s strategy, risk appetite, and financial objectives.

2.   The Role of Legal Due Diligence

Before acquiring a hotel in Bali, comprehensive legal due diligence is essential. This process verifies that the target asset or company is legally compliant and free of hidden liabilities. Key areas of review include:

• Land title and ownership (Right to Build or Right of Ownership certificates)
• Building permits (IMB/PBG) and environmental licenses (AMDAL or UKL-UPL)
• Business Identification Number (NIB) and Tourism Business Registration (TDUP)
• Compliance with zoning and spatial planning regulations
• Employment agreements and labor compliance
• Tax records, liabilities, and ongoing litigation

In Bali, investors must pay particular attention to customary (adat) land issues and zoning restrictions, which can differ by regency and carry significant legal and cultural implications. Neglecting these details can lead to ownership disputes, licensing revocation, or costly project delays.

3.   Legal and Regulatory Risks

Hotel acquisitions involve navigating multiple layers of Indonesian law—corporate, land, tax, employment, and environmental. Common legal pitfalls include:

• Incomplete ownership transfers due to defective land titles
• Unregistered changes in shareholding or management
• Unrenewed licenses under new ownership
• Hidden tax debts or penalties
• Employment disputes following transition of staff

Failure to comply with these obligations can expose investors to civil liabilities, financial penalties, and even criminal sanctions under Indonesian law.

4.   The Strategic Opportunity Behind Compliance

Despite these challenges, hotel acquisitions in Bali offer enormous upside potential. The island continues to attract over 5 million international visitors annually (pre-pandemic levels), with rising demand for eco-luxury, wellness, and digital nomad accommodations.

By adopting a legally sound acquisition structure, investors can:

• Secure long-term control over high-value tourism assets
• Leverage Indonesia’s favorable investment policies under the Omnibus Law
• Benefit from tourism incentives and tax optimization schemes
• Contribute to sustainable tourism aligned with ESG goals

In short, compliance is not merely a regulatory obligation—it’s a competitive advantage.

5.   Achieving Lawful, Efficient, and Sustainable Acquisitions

Successful hotel acquisitions in Bali require balancing commercial opportunity with legal precision. Investors must ensure compliance with:

• Company Law and investment regulations (BKPM)
• Land and building ownership laws
• Business licensing via OSS-RBA
• Employment and labor standards
• Environmental and local customary frameworks

Respecting Bali’s local customs and environmental values is equally important for maintaining community goodwill and long-term sustainability.

6.   How Schinder Law Firm Can Help

At Schinder Law Firm, we provide end-to-end legal solutions for hotel acquisitions and hospitality investments across Indonesia. Our team of experienced corporate lawyers assists with:

• Legal Due Diligence and Risk Assessment
• Transaction Structuring (Share or Asset Acquisition)
• Licensing, Taxation, and Regulatory Compliance
• Employment Transition and Post-Acquisition Integration
• Negotiations with Government and Local Stakeholders

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