Thailand’s hotel industry is heading into its first contraction in five years, with Kasikorn Research Centre projecting a 4.5% decline in revenue for 2025.
The downturn is being fueled by falling international tourist numbers, lower occupancy rates, shrinking revenue from other services, and rising operating costs.
The research centre forecasts that international arrivals will fall by 9% in 2025 to roughly 32.2 million visitors. The average length of stay for foreign travellers is also expected to shorten, adding further pressure on revenue.
Occupancy levels are weakening, with the nationwide rate averaging 71.66% in the first seven months of this year, a 0.2% year-on-year drop.
For the full year, occupancy is set to fall by 2.3% to about 69.83%. Room rates are also slipping, with an average decline of 4% anticipated following a 5% drop earlier in the year.
Other income streams are struggling as well. Fewer international events, concerts, and exhibitions have led to a sharp fall in meetings and seminar revenue.
During the first half of 2025, the number of both domestic and international meetings and seminars dropped by 13% compared to the previous year.
At the same time, hotels are facing increased operational expenses, particularly from higher labour wages. However, with competition intensifying and tourist demand subdued, operators are unable to transfer the full burden of these costs to customers.
This has squeezed margins across the sector, especially for hotels with heavy reliance on international markets.
The impact of the downturn is not evenly distributed. Hotels in major tourist hubs such as Bangkok, Chon Buri, Songkhla, and Chiang Mai, particularly those catering to visitors from East Asia, face the greatest risks.
These destinations are dealing with oversupply, as large numbers of rooms intensify competition. Border provinces such as Sa Kaeo and Ubon Ratchathani are also under strain due to ongoing tensions along the Thai-Cambodian border.
Nevertheless, some provinces are expected to buck the trend and continue expanding. Domestic tourism hotspots including Kanchanaburi, Phang Nga, Nakhon Si Thammarat, Nakhon Ratchasima, and Nakhon Phanom are forecast to grow steadily, buoyed by strong local travel demand.
This contrast highlights the uneven landscape facing Thailand’s hotel industry as it navigates a challenging year ahead.
