The legal requirements imposed by the Hotel Act are very strict and many small businesses are unable to obtain a hotel license. In June, a group of associations asked the government to relax building rules of the Hotel Act so that 20,000 small hotels could obtain a hotel license. The authorities went even further and decided to allow establishments with fewer than 10 rooms and 30 guests to be exempt from hotel registration.
The existing regulations
Previously, a Ministerial Regulation (2005) had specified certain accommodations that are not considered hotels under the Hotel Act. This included residential premises open to the public for rental, not exceeding 4 rooms on any floor in total, whether in a single building or multiple buildings, and with a total service capacity of not more than 20 persons.
At that time, there were debates about rentals in condominiums. Owners were unsure whether "residential premises" referred to each condominium unit or the entire condominium. Eventually, this issue was clarified and the exemption applies only to houses and villas and condominiums are not eligible. These regulations were intended to benefit local people to open small homestays to earn extra income and support local tourism.
New draft regulation
The Interior Ministry has drafted a regulation to increase the exemption threshold to 10 rooms and 30 guests. This type of accommodation will not need to obtain a hotel license and thus comply with the requirements of the Hotel Act.
Some argue that this regulatory relief will benefit small business owners and families who will be able to earn some money and recover financially from the Covid-19 crisis. It will also provide more and varied accommodation options for tourists.
However, the Thai Hotels Association (THA) strongly opposed the draft regulation. The THA believes that allowing individuals to open larger hotel establishments will decrease the safety of guests, as these accommodations will not be subject to the requirements of the Hotel Act. It will also allow smaller hotels to avoid paying hotel taxes. The THA even claims that since these small hotels will not have to report their guests to immigration, it could allow criminals to stay there, which also creates risks for the neighborhood. They also claim that this would create unfair advantages for small businesses over other businesses that strictly follow the rules of the Hotel Act.
The association has requested a public hearing on the issue to discuss the proposed regulation. Therefore, if you already own a small hotel or would like to get into the business, we recommend that you follow the regulatory developments in the coming weeks.