Opening a Hotel in Thailand? Here’s What You Need to Consider
- Opening a hotel in Thailand involves navigating various legal requirements, including obtaining a foreign business license under the Foreign Business Act and structuring the company appropriately to avoid complexities.
- According to Thailand’s Hotel Act, hotels are categorized into four types, each with specific requirements regarding accommodation facilities, room sizes, and additional amenities like dining and entertainment venues.
The hospitality industry is one of the largest and most rapidly growing sectors in Thailand, experiencing significant growth each year. With a steadily increasing influx of tourists seeking new facilities, Thailand presents a prime opportunity for opening a hotel.
In this article, commercial and legal experts from WSR International provide a broad overview of the essential legal considerations, including foreign business licensing requirements, company structuring in Thailand, and the various hotel classifications according to Thai law.
Foreign Business Act
For those interested in operating a hotel in Thailand, they must be cognizant of the fact that they must adhere to the Foreign Business Act, B.E. 2542 (1999), which is listed under List Three (Businesses in respect of which Thai Nationals are not yet ready to compete with foreigners).
As such, foreigners looking to open a hotel in Thailand must obtain a foreign business license as per the Foreign Business Act; however, there are other approaches that can be considered.
Structuring your company
Gaining a foreign business license in Thailand can be a complex procedure, thus foreigners looking to establish a hotel in Thailand could consider establishing a Thai company.
To establish a company in Thailand, a foreign investor must not hold more than 49 percent of the total shares. By utilizing this type of structure, the need for a foreign business license is nullified.
Types of hotels
According to Thailand’s Hotel Act, B.E. 2547 (2004), a hotel means an accommodation established for business purposes of providing temporary accommodation service for travellers or any other person in exchange for compensation.
In October 2023, Thailand’s Ministry of Interior released the amendment to the Ministerial Regulation Regarding the Types and Criteria for Hotel Business Operations. The regulations were adopted to meet the increasing demands of the needs of travellers.
Further, hotels in Thailand are also listed under the following four categories:
- Type 1: Hotels with accommodation rooms only. Type 1 hotels should have no more than 50 guest rooms of not more than eight square meters per room.>
- Type 2: Hotels consisting of accommodation rooms, dining rooms or restaurants or kitchens. Type 2 hotels must have room sizes not less than eight square meters per room.
- Type 3: Hotels providing accommodation rooms, dining rooms or restaurants or kitchens or conference facilities. Type 3 hotels are required to ensure that each room has a minimum area of 14 square meters.
- Type 4: Hotels providing accommodation rooms, dining facilities, entertainment venues, and conferencing facilities. Type 4 hotels are required to ensure that each room has a minimum area of 14 square meters. Hotels with entertainment venues must apply for the necessary licences to ensure compliance with various laws.
Concluding thoughts
Navigating the process of opening a hotel in Thailand involves understanding and adhering to various legal requirements, including foreign business licensing, company structuring, and compliance with the Hotel Act. Further, it should be noted that there are other requirements, including licensing, insurance, and labor and employment considerations.
For tailored commercial and legal advice and support in establishing your hotel business, reach out to the knowledgeable team at WSR Law Group.
Our expertise in legal and commercial matters will ensure that your business is well-prepared to thrive in Thailand’s burgeoning hospitality sector.
