Bali, famous for its surf, beaches and temples, attracted nearly five million visitors last year.
Tourists flock to the Hindu-dominated tropical hotspot annually, while couples hope to tie the knot at beach and cliffside retreats with sweeping views of the ocean.
Others want to get even closer to the waters teeming with colourful fish and coral.
But business has slumped in areas around the volcano since September when Agung's volcanic tremors began to increase.Related articles
Agung is one of over 120 active volcanoes extending the length of Indonesia, which perilously straddles the “ring of fire” – an area along the basin of the Pacific Ocean prone to earthquakes and volcanic activity.
And the huge volcano erupted for the first time in half a century last week sparking nation-wide panic.
As well as a series of mini explosions, the 3,000-metre high mountain has spewed thick black ash clouds into the air, forcing the closure of the international airport and the evacuation order of some 100,000 people.
Indonesia's tourism minister Arief Yahya warned that Bali could lose up to £500 million in visitor-related revenue if Agung's activity doesn't die down before the end of the year.
GETTYThe Bali volcano could have a devastating impact on tourism
"There has definitely been a huge effect because of the volcano," said Ni Komang Astiti, who works at dive operator Dune Atlantis in the southeast of the island.
"We've had many cancellations because the guests can't fly to Bali."
Bali's main international airport was shut for almost three days from Monday as towering columns of volcanic ash and smoke made flying dangerous, sparking travel chaos and leaving around 120,000