A Comprehensive Guide to Starting a Hospitality Business in Indonesia

The hospitality industry in Indonesia continues to regain momentum, supported by its policy measures and sustained government involvement in tourism development.

The Indonesian government has shown strong support to encourage the comeback of domestic travel by providing incentives to travel agencies and airlines, tax waivers to hotels and restaurants in specific destinations and discounts to local travelers.

In addition, the government has implemented several plans that include easing the restrictions for visa (a visa-free travel granted for 169 countries) and foreign investments.

Indonesia Hospitality Industry: Market Overview and Growth Potential

Indonesia’s hospitality industry continues to expand following the tourism recovery and long-term economic growth. With over 15 million arrivals in 2024, Indonesia has marked its hospitality milestone and projected to reach USD 7.7 billion by 2028 (CAGR 6.2%). The accommodation, including hotels, resorts, and serviced accommodation, remains the top sector and expected to grow at 13.5% in the near future.

Main growth drivers include:

• Recovery of international tourism, particularly from Asia-Pacific markets
• Government initiatives of “10 New Balis” creates emerging tourism destinations beyond Bali
• Growth in domestic travel driven by a rising middle class
• Shift towards local culture, unique stays, and new tourism type (eco-tourism and wellness)

Hospitality business in Indonesia is no longer concentrated in a single market. Jakarta, Bali, Batam, Lombok, Labuan Bajo, and parts of Java and Sulawesi are all seeing new developments across different hotel segments.

Key Advantages of Investing in Indonesia’s Hospitality Industry

Indonesia offers several structural advantages for hospitality investors and operators:

Large and Diversified Demand

The market is supported by both international visitors and a large domestic population, reducing reliance on a single demand source.

Favorable Long-Term Growth

Consistent growth forecasts and expanding room supply indicate sustained demand rather than speculative expansion.

Multiple Investment Segments

Opportunities exist across:

• Mid-scale and budget hotels
• Branded and lifestyle properties
• Resorts and destination-based hospitality
• Business and MICE-oriented accommodations

Government Focus on Tourism

Hospitality development is closely linked to national tourism priorities, increasing policy visibility and long-term planning certainty.

For investors seeking exposure to Southeast Asia’s hospitality growth, Indonesia combines market scale, demographic support, and destination diversity.

Key Sectors to Explore in Indonesia’s Hospitality Industry

There are many sectors covered by the hospitality industry in Indonesia, but the following are the ones worth exploring.

Accommodation

Do not postpone when it comes to starting an accommodation business in Indonesia. The property prices are decreasing sharply, between 20 and 50 percent, in plenty of areas in Indonesia, particularly in Bali.

Foreign investors need to secure an accommodation license and a building permit. There are several types of accommodation licenses, depending on the accommodation type and number of rooms, but the most common ones are homestay, hotel and villa licenses.

A homestay license known as Pondok Wisata License is required to rent out an Airbnb villa with three to five rooms and a land size of less than 1,000 m2. This option is available only to solo entrepreneurs. For villas or rental properties with bigger sizes and more rooms, you need to secure a Villa License.

READ MORE:

• How to Start a Business in Bintan Tourism
• Investing in Tanjung Lesung SEZ: Gateway to Tourism & Infrastructure Growth

The good news is, 100% foreign ownership is granted to foreigners who want to open a hotel (3-star, 4-star or 5-star hotel) or a villa. To operate a hotel, secure a Starred Hotel License. Other licenses such as an environmental license, a sanitation license and an alcohol license (SIUP-MB) may also be required, depending on your business activities. From an operational perspective, reliable hotel wifi supports guest satisfaction and day-to-day business activities, making it an essential part of running a licensed accommodation property.

Culinary

Opening a restaurant or a coffee shop in Indonesia allows 100% foreign ownership. Upon the completion of the company registration process, you are required to obtain a Tourism License (TDUP) and additional licenses (if necessary) such as SIUP-MB and Business Identification Number for Excise (NPPBKC).

Retreat

Retreats are extremely popular in Bali and other tourist-packed destinations. Both local and international visitors like to indulge in yoga, health and wellness, luxury and outdoor retreats.

Organizing a retreat in Bali requires company establishment. Once established, you need to secure a business license. An Indonesia temporary stay permit known as KITAS or ITAS is also required.

Hospitality Culture in Indonesia: What Businesses Should Understand

Food and hospitality business in Indonesia is built on deep-rooted cultural values that directly shape service standards and guest expectations. For businesses entering the sector, understanding these values is important.

Relationship-Driven Services

Indonesian hospitality places strong emphasis on personal connection and respect. Guests expect to feel welcomed, recognized, and cared for. Properties that succeed are those that invest in people-centric service, not just facilities.

Warmth as a Service Standard

Friendliness and attentiveness are considered baseline expectations. Politeness, patience, and a calm service approach are deeply embedded in local service culture and are reflected in how hospitality staff engage with guests.

Local Culture as Part of the Experience

Hospitality in Indonesia often integrates local elements, including cuisine, design, and community involvement. Beyond aesthetic, this cultural integration strengthens guest experience and creates differentiation, especially in competitive destinations.

Starting a Hospitality Business with Property or Land Purchase

Before investing, businesses need to understand all the hospitality business requirements in Indonesia. You can choose whether to set up a foreign owned company (PT PMA) or a locally owned company (PT) to be able to buy property or land.

Foreign Owned Company (PT PMA)

With a PT PMA, you can secure the HGB. The land certificate will state the name of a foreign owned company. You can enjoy fully protected ownership through a legal agreement, permission to construct property and income earning through selling or renting the property when establishing a PT PMA.

Locally Owned Company (PT)

The Freehold Title can only be granted to Indonesian citizens. If you wish to secure a Freehold Title for land or property, you will have to establish a PT.

Another option would be securing the Leasehold Right if you are not interested in setting up a PT PMA or a PT. With the Leasehold Right, you can use the property for commercial purposes.

READ MORE:

• Exploring the Potential of Indonesia’s Tourism Industry
• How to Obtain a Tourism Business License in Indonesia

Building Permit in Indonesia

Building Permit (IMB) is a building registration document that informs you about the purpose of a building, either for commercial or residential purposes.

All buildings in Indonesia must secure an IMB. Ensuring that the proper use of the building is in accordance with the written objectives on the IMB is obligatory, regardless of whether you are buying or renting it.

Prepare these documents to secure an IMB: a land certificate, izin kavling, building drawings, correct land zoning, signed permission from owners of neighboring buildings and service and structural drawings.

Starting a Hospitality Business in Indonesia with InCorp

Starting a hospitality business in Indonesia is exciting and the journey is going to be rewarding, but only if you do it right from the very beginning. That is why consultation with business incorporation specialists in Indonesia is highly recommended.

It may be challenging for foreign investors to comply with local regulations of company setup, permit and right acquisition and business licenses, among others.

With more than 10 years of experience, InCorp’s team of experts is ready to provide you with the guidance you need on starting a hospitality business in Indonesia, every step of the way.

Frequently Asked Questions