From time to time we keep on updating real estate purchase regulations in Thailand for foreign investors. We take it to be our duty to update our readers and clients with the ongoing trends in the real estate and property market of Thailand. To date, you must have gone through our articles presenting updates on ownership rights, taxes, and other aspects. As a leading corporate law, accounting, and tax firm in Thailand, we’ll take it a step further in this article and guide you with all details to start a hotel in Thailand.
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 article, you’ll learn how to start a hotel or resort in Thailand, as well as the rules and laws that apply.
Can Foreigners Start Hotels in Thailand?
Foreigners cannot invest in hotels since they can only buy strata-title apartments, which are mostly in condominium buildings. As a foreigner, you can purchase residential physical constructions such as villas. But, you cannot own the land.
To engage in hotels, foreign firms or individuals must have a local Thai acquaintance to partner with in the venture. Foreigners cannot possess more than 49 percent of the company’s share. If you intend to hold more than 49% of the shares as a foreigner, you have to apply for a Foreign Business License (FBL) in Thailand. 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 entering the commercial real estate market, you must understand local ownership regulations. Additionally, it is very desirable to have a trustworthy Thai partner by your side.
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 in Thailand, companies providing paid accommodation for up to 30 days are hotel services. As a result, just renting out a condo unit falls under the definition of a hotel service if you are doing so for more than 30 days. 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
You must follow the Foreign Business Act (FBA) of Thailand to legally purchase and operate a hotel. FBA mentions three different lists, each of which identifies business activity in which foreign investors can 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.
Foreign Business License
The Department of Business Development holds the authority to issue you a Foreign Business License in Thailand. 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 a 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 Licenses 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 a 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 a 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
Certain regulations, such as the necessity for a hotel business license, are not applicable to certain establishments.
Type 1
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
Type 2 hotels offer both lodging and catering or restaurant services. Each room is around 8 square meters in size or larger.
Type 3
The size of each room in these hotels is equal to or greater than 14 square meters, 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
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 a 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, and trademark protection of the establishment.
- The corporate entity, date of establishment, and 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, and 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.
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 corporate law firm in Thailand.
Even after knowing about the regulations and processes, you will never have the legal eligibility to do all paperwork 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 at [email protected] 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 irregular accounting and legal works, we are specialists in all.
