I live on a small island in Thailand, and here, "becoming Bali" is a term that describes a place that has been over-constructed with bungalows and villas; it has become very crowded and very expensive. Most tropical islands started out as hippie places where all houses were cheap, rudimentary wooden bungalows, but then mass tourism and housing investors moved in and pushed the "original hippie population" out and replaced them with expensive villas. That is what is meant by becoming Bali. My guess for the origin of this expression is that Bali was the first place where this happened.