Thai hotels face liquidity crunch amid rising operating costs

Thienprasit Chaiyapatranun, President of the Thai Hotels Association (THA), revealed that a joint survey with the Bank of Thailand on hotel operator confidence in May 2026 found that over 50% of businesses are facing tighter liquidity.

However, they remain at a manageable level to continue operations despite overall costs rising since before the Middle East conflict, particularly for fuel, raw materials, and electricity.

Most hotels also anticipate a revenue decline in Q3/2026 compared to the same period last year, aligning with a drop in tourist numbers.

In May 2026, the average occupancy rate stood at 56%, down from the previous month, while the forecast for June 2026 is 50%.

This decline is attributed to the transition into the low season and the Middle East conflict, which has pressured tourists to reduce travel.

However, approximately 70% of businesses expect the number of foreign tourists in Q4/2026 to return to levels close to those seen before the conflict.

SMEs hit hard and overwhelmed by debt

Small and medium-sized enterprises (SMEs) are the most severely impacted group, as they have less working capital and are not situated in advantageous locations like larger hotels.

In certain areas, such as Patong and city centres in the South, occupancy rates have alarmingly dropped to just 20-30%.

Meanwhile, key tourist destinations like Pattaya are facing a similarly difficult situation.

Unlike large or beachfront hotels that still maintain a solid customer base to sustain operations, the significant revenue drop for SMEs has become a structural problem.

Hotels begin cutting staff and wages

Furthermore, over the past 2-3 months, operators have had to bear the burden of land tax, a major expense that has further strained liquidity.

This has resulted in early signs of staff reductions or shortened work days in some locations.

Even large hotels with monthly payrolls as high as THB30 million have begun negotiating wage cuts or temporary staff furloughs.

The liquidity shortage has not stopped at hotels but is creating a ripple effect on suppliers.

While standard credit terms are typically 30 days, many hotels are now negotiating payment delays to preserve cash.

Although this is something they wish to avoid due to the risk of losing commercial credit, without debt relief from financial institutions, hotels have no alternative but to delay supplier payments.

Nevertheless, the private sector remains optimistic that the situation should normalise during the high season late this year, provided supportive factors, such as successful MOUs with Middle Eastern countries, materialise.

However, a major remaining obstacle is "high airfares".

Despite global crude oil prices dropping to US$70, Jet A1 aviation fuel and passenger fares have not decreased as they should have.

Private sector urges government measures

Tourism and revenue stimulus measures

• Implement measures to stimulate and promote domestic travel.
• Increase joint sales promotions with airlines and other tourism businesses, such as proactive marketing to attract foreign tourists, particularly from Asia, and high-value tourists.
• Promote tourism in both main and secondary cities, such as by increasing government conferences and events.

Cost assistance measures

• Control fuel prices.
• Reduce energy costs and government fees.
• Introduce tax deduction measures, such as for corporate income tax, personal income tax, and property tax.

Financial measures

• Implement liquidity assistance measures, such as low-interest loans for hotel renovations.

Support for sustainable energy investment and labour measures

• Facilitate employee training submissions through government platforms.
• Support training and personnel development in the service sector.

Other measures

• Continuously communicate the tourism industry's status to enable businesses to plan accordingly on time.

Regarding the current tourism situation, the government and the Tourism Authority of Thailand (TAT) are integrating tourism efforts to create new routes connecting main and secondary cities, aiming to increase both domestic and international tourists. They are upgrading the potential of seven regional airports to become an "Airport for Regional Development", targeting Nakhon Si Thammarat, Lampang, Mae Hong Son, Nan, Hua Hin, Phrae, and Roi Et.

This initiative aims to stimulate the economy and tourism nationwide, reflecting a transition from an era of relying solely on major tourist cities to distributing prosperity and comprehensively connecting tourism. It also includes the launch of the Amazing Thailand Grand Sale 2026 under the concept "Unforgettable Experience of Thai Brands" to stimulate travel and spending among Thai and foreign tourists during the Green Season from June to August.

The Thai Hotels Association hopes that the various tourism stimulus measures will not only boost overall revenue figures but will also serve as a key driver in elevating the standards of Thai tourism services for qualitative and sustainable growth.

A critical factor at present is the volatile baht alongside global oil prices, which directly impacts various costs. Operators must navigate economic and consumer behaviour uncertainties by understanding and adapting marketing strategies to suit their target demographics.