Opening a hotel in Thailand requires careful consideration of the legal requirements and regulations specific to the country. Understand the necessary steps, requirements, and tips to be successful in this venture regardless of whether you are a foreign investor or a local entrepreneur.
This guide provides insights on how to start a hotel business in Thailand, including the options available to foreigners, foreign ownership regulations, BOI promotions, and the various business licenses required. It also covers the different types of hotel classifications in Thailand and highlights the importance of compliance with immigration and accounting obligations.
Hotel Classifications in Thailand
Before opening a hotel in Thailand, you must understand the different types of hotels and how they are classified. Here are the five types of hotel businesses in Thailand:
Type 0 Hotels
- These hotels are exempt from certain regulations, including the need for a hotel business license.
- They are usually small establishments with fewer rooms and limited services.
- Type 0 hotels can have up to 4 rooms and accommodate fewer than 20 guests.
Type 1 Hotels
- Type 1 hotels only provide lodging services.
- They have 50 rooms or fewer.
- Each room in a Type 1 hotel should be at least 8 square metres in size.
Type 2 Hotels
- Type 2 hotels offer both lodging and catering or restaurant services.
- Each room in a Type 2 hotel should be at least 8 square metres in size.
Type 3 Hotels
- Type 3 hotels are larger establishments that provide accommodation, catering, restaurant services, conference rooms, and entertainment venues.
- Each room in a Type 3 hotel should be at least 14 square metres in size.
- The entertainment venues in Type 3 hotels may include bars, nightclubs, spas, or dance areas, and they must comply with the Place of Service Act.
Type 4 Hotels
- Type 4 hotels are similar to Type 3 hotels but offer larger rooms.
- They provide accommodation, food or restaurant services, conference rooms, and entertainment venues.
- Each room in a Type 4 hotel should be at least 14 square metres in size.
Understanding these different types of hotels and their classifications is vital for complying with the relevant regulations and providing appropriate services to guests in Thailand.
Legal Considerations for Foreign Investors
Thailand has specific laws and regulations that foreign investors must comply with to operate a hotel business there. Here are some key points and requirements to keep in mind:
Ownership options
Foreign investors can engage in hotel businesses in Thailand through a minority shareholding in a Thai Limited Company or a 100-percent-owned Thai Limited Company (LLC).
If foreigners own more than 49 percent of the shares in a company, they must obtain a Foreign Business License (FBL) to operate a hotel business.
Foreign Business Act (FBA)
The Foreign Business Act must be followed to purchase and operate a hotel in Thailand.
Running a hotel is considered a business activity in which foreigners can participate, but it requires a Foreign Business License.
The minimum capital requirement for a hotel business in Thailand is 3 million THB.
Hotel Act of 2004
The Hotel Act of 2004 defines companies that offer paid lodging for less than 30 days as hotel services.
Renting out a condominium unit also falls under the definition of hotel service.
On August 19, 2016, the Ministry of Interior introduced a set of rules called the Ministerial Regulation Prescribing Qualifications of Other Types of Buildings Used for Hotel Business Operations. It is based on the Building Control Act of 1979. It outlines the specific types of buildings that can be used as hotels and establishes safety requirements.
Some of the safety requirements include guidelines for ladders and walkways in hotel buildings, specifying their length and width. It also mandates that hotels with more than three floors must have fireproof materials for their poles, beams, walls, and roofs. Also, hotels with more than four floors are required to have fire escapes and fire extinguishers installed on each floor.
The regulation also covers the boundaries of hotel buildings, such as parking spaces and the distances between other buildings. These boundaries must adhere to the provisions stated in the Ministerial Regulations.
Foreign Business License (FBL)
The Department of Business Development can issue a Foreign Business License, allowing fully foreign-owned businesses to own and run a hotel.
The application process for an FBL can be lengthy.
Creating a corporation with Thai locals and owning less than 49 percent of the company’s shares is an alternative to avoid the long registration process.
Board of Investment (BOI) Promotion
The BOI offers a promotion scheme for hotel businesses, providing incentives to qualified investors.
Incentives may include tax exemptions and reductions, investment privileges, and assistance with government procedures.
To qualify, the hotel must be located in a designated area, have a minimum investment capital, offer specific services promoting tourism, and comply with environmental and social responsibility standards.
Required Business License
Hotel Business License – required if the hotel has more than four rooms or can accommodate more than 20 guests.
Restaurant Business License -required for hotels providing catering or restaurant services.
Entertainment License – required for hotels offering entertainment such as live music or performances.
Liquor and Tobacco License – required for hotels serving alcohol or tobacco products.
Types of Hotel Licenses
The different types of hotel licenses in Thailand are as follows:
- Hotel and restaurant business license – This license allows you to operate a hotel and restaurant. The application fee for this type of license is 20,000 THB.
- Hotel, restaurants, and seminar rooms license – With this license, you can run a hotel, restaurant, and seminar rooms for events. The application fee for this type of license is 30,000 THB.
- Hotel, restaurant, seminar rooms, and entertainment business license – This license permits you to operate a hotel, restaurant, seminar rooms, and an entertainment business such as a nightclub or bar. The application fee for this type of license is 40,000 THB.
In addition to the application fees mentioned above, an additional fee of 80 THB per room per year needs to be paid. The hotel license needs to be renewed every five years, and during the renewal, you will be required to pay half the price of the government fee.
Obtaining a Hotel License in Thailand
You will need to follow a specific application procedure to apply for a hotel license in Thailand. Here are the general steps involved:
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Application for Construction License
The first step is to apply for a construction license at the district office. This application should be signed off or requested by the engineer or architect. It takes about five working days to process.
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Application at the Provincial Office
After obtaining the construction license, you need to submit an application at the provincial office. The provincial office will then transfer the application to the Health, Environmental, and Construction Authorities. These authorities will inspect and approve the building. The process usually takes about 90 working days.
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Issuance of the License
The hotel license will be issued once the necessary inspections and approvals are obtained. This step generally takes around 15 to 30 working days.
Notably, the entire application process, from the construction license to the issuance of the hotel license, can take approximately six months to complete.
Requirements and Documents
You will need to provide specific requirements and documents during the application process. These typically include:
- Construction permit
- Map of the interior
- Landlord documents
- Map of the location indicating the absence of schools or temples in the vicinity
- Company documents
Only a Thai director can sign the hotel license application and other relevant documents. It is mandatory to have at least one manager to oversee the hotel operations upon obtaining the license.
If you are taking over an existing hotel business, you will need to transfer the hotel license to your name or your company’s name. The transfer process may require fingerprinting at the government office, but there is usually no government fee for the transfer of the hotel license.
Some other Legal Obligations
In Thailand, hotels have certain obligations they must fulfill. One important obligation is that any hotel or guest house hosting foreign guests must register them with the Immigration Department.
According to section 38 of the 1979 immigration act, the owners, heads of household, landlords, or managers of hotels must notify the local immigration authorities within 24 hours of the foreign national’s arrival if they are staying legally in the country.
Hotels must also comply with tax and accounting requirements as they may be subject to audits by the Revenue Department to ensure compliance.
Conclusion
Thinking of starting a hotel business in Thailand? You can start by engaging a company registration firm in Thailand. Doing so helps you fully comply with legal requirements and regulations.
The information presented in this article is solely for informational purposes and should not be considered as legal advice.
