Thailand Hotel Closures Rise 42% as More Rooms Compete for Fewer Foreign Visitors

148 businesses close as Thailand's hotel recovery strains

Thailand recorded 148 hotel and accommodation business closures between January and September 2026, a rise of 42% from the same period a year earlier, as an expanding supply of rooms collided with weaker foreign demand. New business registrations fell 31.2% to 779, according to Department of Business Development figures cited by Kasikorn Research Center.

The pressure extends beyond businesses that have formally closed. About 51% of accommodation operators reported losses in 2025, and 38% recorded losses for three consecutive years from 2023 to 2025. Smaller operators have suffered more, leaving businesses with fewer financial reserves to absorb another difficult tourism season.

Kasikorn expects 31.4 million foreign arrivals in 2026, equivalent to about 79% of the 2019 total. Thailand nevertheless had approximately 876,000 accommodation rooms by the first half of 2026, an increase of 11.7% from 2019. More rooms are competing for a foreign visitor market that remains substantially smaller than before COVID-19.

The consequences reach employees, suppliers and communities around tourist destinations. Thailand has approximately 15,000 accommodation operators, roughly 98% of them small or medium businesses, employing around 430,000 people. Some hotels are closing permanently; others are suspending operations during quieter months to limit expenses.

Even the approach of the main tourism season has brought limited comfort to some operators. Naree Sunetta, president of the Thai Hostel and Small Accommodation Association, described quiet hostels in late October, when demand would normally begin strengthening. Her account points to a difficult transition from surviving the low season to earning enough during busier months.

Small businesses carry the heaviest losses

Among smaller accommodation operators, 54% reported losses in 2025, compared with 51% across the industry. Kasikorn also found that 42% of small operators accumulated losses throughout 2023 to 2025, against 38% for the sector.

Repeated losses reduce the cash available for wages, maintenance and loan payments. Liquidity, the money a business can readily use to meet its bills, becomes especially important when bookings fluctuate but regular expenses continue.

The number of new accommodation registrations still exceeded registered closures during the first nine months of 2026. However, entry slowed sharply while exits accelerated. The closure figure also sits within a wider business slowdown: Department of Business Development data showed more than 13,000 registered business closures across Thailand during the same period.

Suphamit Kitchaphat, president of the Chiang Mai Tourism Business Association, described two responses among hotels: permanent closure and temporary shutdowns outside the main tourism season. Seasonal suspensions allow operators to reduce expenses while waiting for demand to recover.

Room supply keeps growing despite weaker demand

Thailand's accommodation supply reached approximately 876,000 rooms in the first half of 2026, up 3.4% from the end of 2025. Room numbers increased in 64 provinces, with new supply entering several price categories, particularly in Bangkok, Phuket, Surat Thani and Chiang Mai.

Kasikorn estimated that the average number of overnight visitors per room fell from 249 in 2019 to 228 in 2026. That is a decline of about 8.4%, calculated from those two figures. Each room is competing for a smaller pool of overnight visitors on that measure.

The expansion follows years of investment. Krungsri Research's Hotel Business Outlook records an increase from 634,855 rooms in 2015 to 847,029 in 2024, or approximately one third. Bangkok, Phuket and Chonburi together accounted for 40% of national room supply in 2024.

Alternative accommodation adds another layer of competition. AirDNA figures cited by Kasikorn showed around 50,000 rental units across Bangkok, Phuket, Chonburi, Chiang Mai and Surat Thani as of October 2026. Those units were equivalent to about 10% of registered accommodation rooms in those markets and averaged approximately 60% occupancy over the preceding 12 months.

National averages conceal local pressure

Nationwide hotel occupancy increased by only 0.18% compared with a year earlier during the first nine months of 2026, according to Kasikorn, while 19 provinces recorded declines. Occupancy measures the share of available rooms that guests actually use.

Naree described occupancy declines of 30% to 40% in major cities among the businesses she discussed. Her account concerned the hostel and small accommodation market, while Kasikorn's figure covered the national hotel market over nine months. Smaller businesses can therefore face a much sharper contraction than the national average suggests.

The uneven recovery was already visible in 2025. Kasikorn found that 29 provinces had fewer overnight visitors than in 2019, including Bangkok, Phuket, Chiang Mai, Songkhla, Trat and Sukhothai. Seventeen of those provinces were more than 10% below their 2019 levels.

Krungsri's figures show national occupancy averaging 71.4% in 2025, close to 71.5% a year earlier. Bangkok nevertheless lost 2.4 percentage points and Phuket 1.4 percentage points. Chonburi's smaller decline of 0.6 percentage points reflected support from domestic visitors and business travel associated with investment in the Eastern Economic Corridor.

China's slowdown changes who fills the rooms

Krungsri recorded 32.97 million international arrivals in 2025, down 7.2%. Chinese arrivals fell 33.6%, and China accounted for 13.6% of foreign visitors that year, compared with nearly 30% in 2019.

Safety concerns, weaker economic conditions in visitor markets and competition from other destinations have slowed the recovery. Krungsri points to Vietnam's efforts to attract Chinese travellers, while Kasikorn identifies safety perceptions and geopolitical tensions among the pressures on demand.

Suphamit said Chinese visitors were also shifting from large organised tours to smaller groups. Hotels that previously relied on tour operators bringing substantial groups now face a different booking pattern. Kasikorn also describes growing interest in independent trips, local culture, nature and wellness experiences.

Other visitor markets have provided support. Krungsri recorded growth of 12.1% in arrivals from India and 8.8% from Russia in 2025, alongside a 12.4% increase from Europe. Additional direct flights helped those markets, particularly connections serving Phuket.

Higher airfares remain a concern for accommodation operators because travellers consider the cost of the whole trip. Industry representatives say some visitors are delaying travel to Thailand or choosing cheaper destinations such as Vietnam.

Rising revenue does not reach every hotel

Kasikorn expects Thailand's hotel and accommodation market to reach THB1.1 trillion in 2026, an increase of 2.6% from 2025. Domestic travel and meetings, incentives, conferences and exhibitions are helping support that growth.

Accommodation contributes approximately 77% of sector revenue in Kasikorn's assessment. The remaining 23% includes catering, meetings, seminars, food and beverages. Hotels that can earn money from events and dining have revenue sources beyond overnight stays, while businesses focused mainly on rooms have fewer alternatives.

Room prices are under pressure. Kasikorn forecasts a 0.8% decline in the average daily room rate in 2026, following growth of just 0.1% in 2025. The average daily rate is the amount earned per occupied room.

Krungsri's figures also show pricing weakness, using a different reporting period: the average daily rate fell 3.4% to THB1,819 during the first 11 months of 2025. Revenue per available room fell 3.2% to THB1,292. That second measure spreads room revenue across all available rooms, including empty ones, making it useful for understanding the combined effect of prices and occupancy.

National revenue can rise while individual hotels lose money because growth is spread unevenly across destinations and businesses. Larger properties with stronger locations, varied customers or conference facilities may be better placed than smaller hotels competing mainly on price.

Cash shortages spread to workers and suppliers

Thienprasit Chaiyapatranun, president of the Thai Hotels Association, cited a joint hotel confidence survey with the Bank of Thailand showing that more than half of operators faced tighter liquidity in May 2026. Average occupancy that month was 56%, with June forecast at 50% as the low season and conflict in the Middle East weighed on travel.

Some locations were much weaker. Thienprasit described occupancy of 20% to 30% in Patong and southern city centres, with Pattaya also struggling. Smaller businesses had less working capital to cushion falling receipts.

Wages account for approximately 25% to 30% of hotel costs. Operators have responded with staff reductions, shorter working days, discussions about wage cuts and temporary leave without pay. Some large hotels faced monthly payrolls as high as THB30 million.

Suppliers are feeling the strain as well. Hotels have sought to delay payments beyond standard credit terms of 30 days to preserve cash. That transfers part of the financial pressure to businesses supplying food, equipment and other necessities.

Kasikorn estimates that variable costs, expenses that change with business activity, represent around 40% to 45% of total costs, depending on the operating model. Energy, electricity, transport, food, supplies and booking platform fees could become more expensive in 2027, adding pressure even if guest numbers improve.

Operators seek loans and changes to accommodation rules

Industry representatives are asking for easier access to credit, financial assistance, lower travel costs and a review of the foreign tourist fee. The Thai Hotels Association has also called for energy cost relief, tax deductions and loans at low interest rates for hotel renovations.

Requests for financial support are tied to immediate operating needs. A hotel awaiting the main tourism season must still pay staff, maintain its building and settle bills before the next wave of bookings arrives. Borrowing can provide that cash, although repayment adds another future expense.

The proposed Accommodation Act would extend regulation to newer formats, including homestays, hostels, boutique hotels and properties in the sharing economy. Regulation would be based on business size and risk. Operators have urged faster progress on the legislation; the accounts of those requests give no implementation date.

Kasikorn says broader regulation could improve consumer protection while also increasing compliance and competitive pressures. Environmental and social standards are becoming more relevant to European travellers and corporate customers, creating additional demands for businesses seeking those markets.

Climate volatility brings further expenses through electricity use, water management, insurance, food prices and exposure to flooding. It can also encourage travellers to book later as they wait for weather conditions to become clearer, making cash flow harder to plan.

Forecasts offer different views of the next recovery

Kasikorn projects 31.4 million foreign arrivals in 2026, described in its assessment as a 4% annual decline, followed by 31 million to 33 million in 2027. Krungsri's outlook projects a stronger recovery, with 35.5 million arrivals in 2026, 37.5 million in 2027 and 39 million in 2028.

The difference is substantial: Krungsri's 2027 projection exceeds the top of Kasikorn's range by 4.5 million visitors. Both outlooks identify competition from other destinations, a slow Chinese recovery and excess accommodation supply as constraints, but they present different expectations for how quickly demand will recover.

Domestic travel also matters. Kasikorn forecasts 205.5 million to 208 million domestic trips in 2027, compared with the 202.4 million trips Krungsri recorded for 2025. These figures count trips rather than individual people, so a resident travelling several times contributes several trips.

Kasikorn projects national hotel occupancy of 69.58% to 71.69% in 2027. Krungsri projects 72.5%. Demand from Europe, the Americas and the Middle East will be closely watched, particularly where geopolitical disruption affects routes and travel costs.

The sequence of pressure on the industry is visible across several dates:

• 2023 to 2025: 38% of accommodation operators accumulated losses throughout the three years, rising to 42% among small operators.
• 2025: Krungsri recorded 32.97 million foreign arrivals, while 51% of accommodation operators reported losses.
• May 2026: A hotel confidence survey found tighter liquidity at more than half of operators.
• January to September 2026: Registered accommodation closures reached 148, while new registrations fell to 779.
• 2027: Kasikorn expects 31 million to 33 million foreign arrivals and warns of further closures or business sales if costs remain high and cash reserves run short.

Kasikorn recommends broadening customer markets and revenue sources rather than relying on discounts alone. Its suggestions include domestic travellers, longer stays, cafés, meeting services and shared workspaces, alongside technology and energy investments to control expenses. For new developments, it urges close assessment of local room supply and target customers before committing capital.

Key Points

• Thailand recorded 148 accommodation business closures in the first nine months of 2026, up 42%.
• New registrations fell 31.2% to 779 as room supply continued expanding.
• More than half of operators reported losses in 2025, with smaller businesses facing greater pressure.
• Approximately 876,000 rooms competed for foreign demand that Kasikorn expects to remain well below 2019 levels.
• Cash shortages are affecting staffing, supplier payments and the ability to stay open during quieter months.
• Kasikorn and Krungsri forecast different speeds of recovery, while both identify excess supply and intense competition.