Want To Start Hotel in Thailand?

8 min readFeb 4, 2022

We’ve already covered foreign ownership rules, taxes, and other aspects of buying residential real estate. We’ll take it a step further in this article and look at how it works when owning hotels and resorts. Purchasing a hotel is more difficult because the properties are treated as businesses. As a result, different rules apply. The transaction values are also generally higher. In this post, you’ll learn how to start a hotel or resort in Thailand, as well as the rules and laws that apply.

Can Foreigners Start Hotel in Thailand?

Foreigners are not permitted to invest in hotels since we are only permitted to buy strata-title apartments, which are mostly found in condominium buildings. Even if we are allowed to purchase residential physical constructions such as villas, we are not permitted to own the land on which they are constructed.

To engage in hotels, foreign firms form a Joint Venture (JV) with a local partner or a Thai Limited Company (LLC). If foreigners possess more than 49 percent of the company’s shares, you’ll need to apply for a Foreign Business License (FBL). It’s also worth noting that the Board of Investment (BOI) may exclude foreigners from applying for an FBL if they invest in specific projects.

Foreign Ownership Regulations of Hotels in Thailand

Before you enter the commercial real estate market, it’s critical that you understand local ownership regulations and select a trustworthy partner.

There are a number of restrictions that apply to you as a property owner, as well as the building, operations, and management. Thailand’s Hotel Act 2004, which specifies your rights as a foreign hotel owner in Thailand, is the most commonly discussed statute.

Thailand’s Hotel Act of 2004

According to the Hotel Act of 2004, companies that provide paid lodging for fewer than 30 days are considered hotel services. As a result, just renting out a condo unit falls under the definition of a hotel service. If you look at Airbnb in Bangkok, you’ll see that there are a lot more alternatives if you enter a stay of more than 30 days.

Individual condo owners typically do this as a precautionary step. In actuality, many of them are unaware of the specific regulations that apply. It’s worth noting that certain projects and structures are excluded from the law. In simple terms, it contains information and laws about, for example, how many rooms you have on each floor and whether or not you are eligible for exemptions.

The Foreign Business Act

The Foreign Business Act must be followed in order to legally purchase and operate a hotel (FBA). It was published a few decades ago and includes three different lists, each of which identifies business activity in which foreigners are welcome to participate.

Running a hotel is on the third list, which necessitates the acquisition of a Foreign Business License. The reason for this is that “Thai enterprises are not yet ready to compete with international companies in the industries specified,” according to the statement. If you are on the third list, you will need a minimum capital of roughly THB 3 million, which is more than the previous two lists.

Foreign Business License

The Department of Business Development can issue you a Foreign Business License, but the application process can be lengthy. Many foreigners choose to create a corporation with Thai locals, owning less than 49 percent of the company’s shares, in order to circumvent the lengthy registration process.

You do not need to apply for a Foreign Business License in this scenario because the company is deemed, Thai. Foreigners can, however, be majority shareholders in hotels in specified areas and projects. Your lawyer and agent can assist you in determining whether or not this is the case for you.

Board of Investment (BOI) Thailand

BOI can grant you exemptions and allow you to run your business in Thailand while also being the majority shareholder in your Thai firm.

This is occasionally decided by the BOI and is based on a project level. These BOI-promoted businesses are exempt from the Foreign Business Act and the requirement to get a Foreign Business License.

Other Licenses You Need to Start Hotel in Thailand

You’ll also need a number of other licenses in addition to the Foreign Business License. The number of licenses required will be determined by the size of your hotel and its operations. Examples of such licenses are:

Licenses for the hotel business
License for the restaurant business
License for the seminar rooms
Separate License for the entertainment offered
Liquor and tobacco licenses

Any hotel with more than four rooms or the capacity to accommodate more than twenty guests must get a hotelier’s license from the Department of Provincial Administration in Bangkok or the Provincial Governor’s Office in other locations. A Permit for Selling Food, Liquors, and Cigarettes is required for hotels that provide catering or restaurant services.

How to Get Hotel License in Thailand?

A hotel license is mandatory to operate a hotel in Thailand. It’s one of the most crucial things to get before you start working. Following that, we’ll go over the expenses and procedures for obtaining a hotel license in Thailand.

Necessary Documents to Get Hotel License

Generally, you have to provide the following documents to get a hotel license:

Landlord documents
Map of the location
Construction permit
Map of the interior
Other company documents

Process of Getting Hotel License

The process to get a hotel license is generally as follows:

Submit an application to the district office to get a construction license
Provide a second application to the provincial office. The application is sent to the health, construction, and environment authority.
After thorough inspection and verification, the authorities reject or approve the applications

It takes around 6 months to get a hotel license.

Classification of Hotels in Thailand

As a result, the license requirements vary depending on the type of hotel and its size. The following are the five different types of hotel businesses:

Type 0 Hotels

Certain regulations, such as the necessity for a hotel business license, are not applicable for certain establishments.

Type 1 Hotels

Type 1 hotels solely provide lodging. These hotels have less than or equal to 50 rooms, each of which is equal to or larger than 8 square meters in size.

Type 2 Hotels

Type 2 hotels offer both lodging and catering or restaurant services. Each room is around 8 square metres in size or larger.

Type 3 Hotels

The size of each room in these hotels is equal to or greater than 14 square metres, and they offer accommodation, catering, or restaurant services. The hotel also features conference rooms and entertainment venues that, under the Place of Service Act, could include places for dancing, bars, nightclubs, and spas.

Type 4 Hotels

Accommodation, food or restaurant services, conference rooms, and entertainment venues are all provided by Type 4 hotels. Each room is equal to or larger than 14 square meters in size.

Documents To Check Before You Buy Hotel in Thailand

To successfully buy a hotel in Thailand, you should check the following information and documents, prior to the purchase.

Hotel name, number of rooms, trademark protection of the establishment.
The corporate entity, date of establishment, shareholders’ background.
Date of land acquisitions, land title deeds or other land documents, lease agreements, household registrations.
Building construction permits (with application date), including permits for maids quarters, guest accommodation, and swimming pool, if any.
Environmental impact assessment documentation, BOI promotion certificate (if any).
Licenses for hotel business, restaurant business, seminar rooms, entertainment business (with application and expiration date).
Liquor licenses, tobacco licenses, and similar.
Hotel management agreements and similar arrangements.
Agreements with marketing websites, organizations, and software (Agoda, Amadeus, Fidelio user license agreement, etc.).
Other commercial agreements like maintenance and cleaning service agreements.

These are just examples and you should review and assure that additional documents are available upon the acquisition.

Best Cities to Start Hotel in Thailand

Hotels typically sell for tens of millions or even hundreds of millions of dollars. The legalities outlined above are just as crucial as choosing a good city and area to secure future profits. Hotel yields are greater than residential property yields, averaging 6 percent to 7% in Bangkok. The yields in smaller vacation cities can be considerably higher.

The most popular cities to start hotel in Thailand are Bangkok, Samui, and Phuket.

Bangkok

It’s no surprise that Bangkok is at the top of the list of the most popular destinations for hotel investors. In terms of value, Bangkok accounted for about 80% of all transactions in 2017. Bangkok may boldly claim to be the most visited city in the world, as it is Thailand’s financial capital and an alpha city in Asia.

In terms of the number of transactions, there were only 7 hotel purchases in 2018, down from roughly 20 percent in 2017. The hotel business was severely harmed in 2020 as a result of the COVID-19 epidemic, which halted foreign investment. But gradually it is making a comeback with some promising returns in 2022.

Phuket

In recent years, Phuket has experienced a significant increase in foreign hotel investments. It is one of the most popular tourist destinations, and the hotel sector has thrived. Access to Phuket’s international airport, which has direct flights to numerous locations around Asia and the rest of the world, is one of the key advantages of doing business there.

Phuket has long been the most popular destination for tourists, and it will remain so for a long time. Due to the ongoing COVID-19 outbreak, a city, like Bangkok, has had difficulty recruiting tourists.

Koh Samui

For visitors or residents seeking more peace and solitude, Samui is a better option. There are fewer condo buildings on the island with more villas under construction.

Even though rates have risen significantly over the years, Samui should be among your top three choices for hotel investments in Thailand.

The Bottomline

This article is a complete guide in your venture to start a hotel in Thailand. Hopefully, you have understood the process. But, the most important aspect to facilitate this activity of yours is your association with a reliable and veteran law firm in Thailand.

Even after knowing about the regulations and processes, you will never have the legal eligibility to do all paper works on your own in Thailand. As a foreigner, you have to take the help of a local law firm in Thailand. Email us your plan and we will take up your case to make your plan to start a hotel in Thailand successful. Starting from company registration up to maintaining the irregular accounting and legal works, we are specialists in all.

Originally published at https://www.konradlegal.com on February 4, 2022.