Thailand has always been a good place for business for Foreigners. But if you’re thinking of investing in a business with assured RoI, Hotel and Hospitality sector is best, when it comes to Thailand. The tourism sector contributes to 20% of the Thai Economy and 100% to the Hotel Industry in Thailand. So, read this to know what it takes to open a hotel in Thailand.
Most of the time, starting a hotel as a business in Thailand is a very profitable undertaking; however, it is subject to quite a significant amount of regulation.
Registration and Ownership
While any type of business entity can be registered by a Thai national, foreigners should use a Private Limited Company to open a hotel in Thailand. The Foreign Business Act restricts foreigners’ ability to own and operate hotels. Before starting a business, foreigners must get a Foreign Business License from the Department of Business Development. However, a Thai Limited Company held by a Thai majority will not be subject to these restrictions.
Therefore, many people find it advantageous to form a business partnership with a Thai person in order to meet the legal definition of a “Thai company,” requiring Thai individuals to own at least 51 percent of a company’s shares.
There may be an exclusion for Foreigners from certain of the FBA’s criteria under specific circumstances. For example, hotels with 100 rooms or more, or with a minimum investment capital of 500 million baht, are not eligible for the Board of Investment’s tax privileges. Furthermore, depending on the project, the BOI may enable foreigners to own a majority of shares in some promoted ventures if it is deemed appropriate.
Under the Treaty of Amity between Thailand and the United States, US citizens (including corporations) are allowed to own a controlling stake in Thai hotels.
Licensing to Open a Hotel in Thailand
One must obtain all licenses prior to the start of company operations. The number of licenses is determined by the hotel’s facilities and services. Any hotel with more than four rooms or the capacity to accommodate more than 20 guests must get a hotel business license. The owner can get it from the Department of Provincial Administration in Bangkok or the Provincial Governor’s Office in other places.
There is a requirement for a separate permit for selling food, liquors, and cigarettes for hotels that provide catering or restaurant services. Any hotel that provides conference room services or has places of entertainment, such as pubs, clubs, bars, and spas, must obtain an entertainment permit.
Thailand is one of the safest areas to open a hotel. Moreover, its tourist sector accounts for about 20% of the country’s GDP normally. Even in the era of COVID restrictions, the sector is contributing to 7% of the country’s GDP. The country’s rapidly rising urban hubs annually attract a large number of international investors. They are always in need of short or long-term lodging. Furthermore, Thailand’s gorgeous islands attract many tourists. Thailand is the world’s eighth most visited place in the world out of the top 50 leading tourist destinations.
Our Thailand Company Formation Experts can help you with the business registration process and keep you up to date on the legal requirements to open a hotel in Thailand.
Legal requirements for the opening of a hotel in Thailand
To open a hotel in Thailand, you’ll have to follow several rules of the Thai legislative structure. Thai legislation requires hotel owners to apply for many permits for the purpose. Pertinence to such conditions is in order to guarantee safe circumstances for hotel visitors. Any lodging establishment with more than four rooms available for booking requires a hotel license.
For a foreign investor, it may not be difficult to open a hotel in Thailand. All that is needed is the membership of the Board of Investment (Bol). In this case, we can help you get the Board of Investment promotions and membership. You can ask questions and get answers from one of our Thailand company formation experts. Additionally, you will get complete information on business structures available in Thailand and how you can organize your hotel.
Key requirements to open a hotel in Thailand
The building permissions are key factors to consider before the finalization of your business premises. However, if you use an already existing building by purchasing a Thai property there are different regulations altogether. The Building Control Division of the Department of Public Works and Town Planning receives building license applications.
The most desirable locations for hotel construction are typically those in scenic settings. However, the scenery and environment must be protected from excessive pollution. Moreover, compliance with Environmental Impact Assessment (“EIA”) or an Initial Environmental Examination (“IEE”) is a must. This is to ensure that the accommodation business will operate in an environmentally sustainable manner.
Please do not hesitate to contact us by emailing us at [email protected] to learn more about the business registration process and the legal requirements to open a hotel in Thailand.
