RESPONSIBILITY OF STAKEHOLDERS IN MINIMIZING LEAKAGE OF TOURISM INDUSTRY (A Case of Accommodation in Bali, Indonesia) Agung Suryawan Wiranatha a , I Gusti Ayu Oka Suryawardani b a Doctorate Program in Tourism, Udayana University, Denpasar-Indonesia E-mail : balitruly@yahoo.com b Student at Doctorate Program in Tourism, Udayana University, Denpasar-Indonesia E-mail : gungdani@gmail.com ABSTRACT Tourism has become the leading economic sector in Bali Province of Indonesia. However, the economic impacts of tourism have not been convinced to be fully beneficial for Balinese community. One of the reasons is tourism leakage that occurs when the industry imports both products and services to support tourism industry in Bali. This study was undertaken to examine tourism stakeholders’ role in minimizing tourism leakage, and to develop strategy that can be implemented by the stakeholders in minimizing the tourism leakage in Bali, particularly at accommodation sector. Interpretative Structural Modelling (ISM) was undertaken to gain the stakeholders’ perception, meanwhile survey was undertaken to collect information from hoteliers. In general, tourism stakeholders are willing to participate in minimizing the tourism leakage by reducing the import components used in the accommodation sectors, as long as local products are available to substitute the imported products. There are several local products can be used to substitute the imported products, mostly processed foods and horticultural products. Similar to the stakeholders, tourists are also willing to consume local products during their stay in Bali. It is suggested that several important strategies that can be implemented by involving stakeholders. The involvement of stakeholders in the strategic planning process through participatory approach gives better understanding, awareness, and responsibility to minimize tourism leakage of accommodation sector in Bali. Keywords Tourism, Leakage, Accommodation, Stakeholder, Participatory, Bali 1. INTRODUCTION 1.1 Background Bali is one of popular world tourist destinations due to its cultural activities and natural scenery, therefore tourism is a driving force in the economic development of Bali Province. As Bali‟s economy has been developed mostly through tourism, it has resulted in changing in economic sectors of Bali Province from agricultural sector to service sector. The contribution of agricultural sector to the Gross Domestic Product (GDP) of Bali has decreased dramatically from 61.21% in 1969 to 16.84% in 2012 while the contribution of service sector (trade, hotels, and restaurants) have increased from 9.52% in 1969 to 30.66% in 2012. Meanwhile, the contribution of industrial sector (such as handicraft industry, etc.) has fluctuated but showing a growth trend from 1.67% in 1969 to 9.97% in 2010 [1] and [2]. Even though the contribution of agricultural sector has decreased, it still has a crucial role in Bali‟s economy, as source of jobs and income, raw materials for industry, and foreign exchange earnings, and and tourist attractions [3] and [4]. Tourism in Bali has been developed significantly. The number of direct arrivals of foreign visitors to Bali increased dramatically from 23,340 visitors in 1970 to reach 3.278.598 visitors in 2013 [5]. However, there were several downturns in number of foreign visitors visiting Bali due to Bali bombings on 12th October 2002 and in 1st October 2005. The Bali bombs had the greatest impact on number of foreign visitors to Bali than other crisis in the history of tourism in Bali [6]. Efforts were undertaken by the government to convince foreign visitors to visit Bali after the Bali bombing tragedy, it was resulted in gradual increases of foreign visitor direct arrivals since year 2007. During the period of 2007 up to 2013, the average growth rate of direct arrivals of foreign visitors to Bali was 14.9 % per year [5]. As a world-class tourist destination, Bali is supported by the availability of various tourism facilities within the region. There were 2,212 units accommodation with total of 46,025 rooms registered in Bali in 2012. These included 156 units star-rated hotel (20,269 rooms), 1,031 units of Non star-rated hotels (21,114 rooms), and 1,025 unit homestays (4,642 rooms). However, Bali Hotel and Restaurant Association (PHRI Bali) accounted 3,346 units accommodation (62,407 rooms) in Bali in 2011, that was consisted of 165 units star-rated hotel (22,161 rooms), 1,371 units of Non star-rated hotels (28,585 rooms), 1,760 unit homestays (9,282 rooms), 15 condotels (1,793 rooms), and 35 units rental house (586 rooms). It could be more accommodation available in Bali than the above numbers as many more accommodations unregistered or operate illegally in Bali in year 2013. In addition, the average tourist expenditure