Sheila von Wiese Mack, 62, was discovered stuffed into a suitcase in the boot of a taxi on Tuesday, according to Fairfax media.
Ms Mack’s 19-year-old daughter, Heather, and Heather’s 21-year-old boyfriend, Tommy Schaefer, have been arrested over the death.
Ms Mack and Heather had been staying at the five-star St Regis hotel in Nusa Dua for several days before Mr Schaefer joined them on Monday.
According to local police, CCTV footage shows Ms Mack and Schaefer argued in the hotel lobby on Monday night.
The next day, the young couple sent their suitcases – one allegedly containing the body of the victim – to a taxi, but failed to appear in the lobby.
Instead, they allegedly left the hotel via the beach entrance and were later found sleeping at a hotel in a neighbouring area.
A doctor said Ms Mack’s body was naked, with several head wounds and evidence suggesting a struggle.
Her body was sent to the main hospital in capital city Denpasar for an autopsy.