New analysis finds Thailand’s hotel sector in deeper trouble
Dhaka: Business closures in Thailand's hotel and accommodation sector are rising fast. Weak tourism demand, tougher competition, and high operating costs are squeezing operators, according to a new analysis by Kasikorn Research Center (KResearch).
Closures climb, losses widespread
A total of 148 hotel and accommodation businesses registered their closure in the first nine months of 2026, up 42% from a year earlier, KResearch said.
About 51% of operators reported losses in 2025. Small businesses were hit hardest, with around 54% of them operating at a loss.
Additionally, 42% of small operators recorded accumulated losses for three straight years from 2023 to 2025. Across the whole sector, 38% of operators posted accumulated losses over the same period.
Market grows, but unevenly
The sector is expected to be worth around THB 1.1 trillion in 2026, a 2.6% rise from 2025. Accommodation makes up about 77% of revenue, while catering, meetings, seminars, and food and beverage services account for the remaining 23%.
The industry has about 15,000 operators, over 98% of which are small and medium-sized businesses. It employs around 430,000 people and accounts for roughly 5.7% of Thailand's gross domestic product.
International meetings and conferences and steady domestic travel have supported revenue. However, the recovery has not reached all operators.
Nationwide occupancy edged up only 0.18% year on year in the first nine months of 2026, while 19 provinces saw declines.
New registrations also slowed. Some 779 businesses were established during the period, down 31.2% from a year earlier, though still above the 2024 level.
Foreign arrivals still lag
KResearch projects about 31.4 million foreign visitors in 2026, a 4% drop from 2025 and only around 79% of the 2019 level.
It blamed stronger competition among destinations, economic weakness in source markets, safety concerns, and geopolitical tensions.
In 2025, visitor numbers from 18 key markets, including China, South Korea, Japan, Laos, the United States, and Scandinavian countries, remained below 2019 levels.
Travel preferences are changing too. Tourists increasingly favor local culture, nature, and wellness experiences, while solo and independent trips are gaining ground over organized tours.
In 2025, 29 provinces recorded fewer overnight visitors than in 2019, with Bangkok, Phuket, Chiang Mai, Songkhla, Trat, Udon Thani, Khon Kaen, and Sukhothai among them and 17 falling by more than 10%.
Supply outpaces demand
Room supply is growing faster than overnight demand. Thailand had about 876,000 rooms in the first half of 2026, up 3.4% from the end of 2025 and 11.7% from 2019.
Supply rose in 64 provinces, with new rooms entering the market across price categories, especially in Bangkok, Phuket, Surat Thani, and Chiang Mai.
The average number of overnight visitors per room is estimated to have fallen from 249 in 2019 to 228 in 2026, pushing some operators to compete on price.
Alternative accommodation adds to the pressure. AirDNA data showed about 50,000 rental units in Bangkok, Phuket, Chonburi, Chiang Mai, and Surat Thani as of October, equal to roughly 10% of registered rooms in those markets. Their average occupancy was about 60% over the previous 12 months.
KResearch expects the average daily room rate to fall about 0.8% in 2026, after a 0.1% rise in 2025.
Uncertain outlook for 2027
Foreign arrivals in 2027 are forecast at 31 million to 33 million, ranging from a 1% decline to 5% growth from 2026. The forecast assumes geopolitical tensions do not spread and seriously disrupt travel routes, particularly for long-haul markets in Europe and the Middle East.
Domestic trips are projected at 205.5 million to 208 million, up 0.5% to 1.8%.
Nationwide occupancy could range from 69.58% to 71.69%, anywhere from a 2% decline to a 1% increase.
Costs remain a risk. Variable costs make up about 40% to 45% of total expenses and could climb with higher energy, electricity, transport, food, and supply prices, as well as online travel agency fees.
Hotels with high fixed costs and limited liquidity could face further closures or sales if weaker occupancy coincides with rising expenses.
Regulation, climate add strain
Thailand's proposed Accommodation Act would extend regulation to homestays, hostels, boutique hotels, and sharing-economy properties, with rules based on business size and risk. KResearch said it could improve consumer protection but also increase compliance burdens and competition.
Environmental, social, and governance standards are gaining importance, especially for European travelers and corporate clients. Operators lacking recognized sustainability credentials may be disadvantaged on online travel platforms.
Climate volatility is raising electricity, water management, insurance, and food costs and encouraging more last-minute bookings.
Recommendations
KResearch urged operators to diversify customer markets and revenue streams instead of relying on price cuts. Suggested options include targeting domestic travelers and adding co-working spaces, cafés, meeting services, and long-stay packages.
It also advised adopting technology, renewable energy, and locally sourced materials to control costs. New investors should carefully assess local room supply, target customer mix, and sustainability factors, it added.
