Hotel Business 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.
Step 1: Business registration and Ownership
While a Thai national may register any form of business entity, a private company limited is the most suitable form of entity for foreigners. The Foreign Business Act limits the rights of foreigners to own and operate a hotel business. Foreigners must obtain a Foreign Business License from the Department of Business Development prior to commencement of operation. However, it is worth noting that a Thai limited company that is majority owned by a Thai will not encounter such restrictions. Consequently, it is beneficial for many to form a business partnership with a Thai national, in order to meet the legal definition of a “Thai company”, i.e. at least 51 percent of a company’s shares must be held by Thai citizens.
In some instances, foreigners may be exempt from certain requirements imposed by the FBA. Hotels with 100 rooms or more, or with the minimum investment capital of not less than 500 Million baht are qualified for not tax privileges granted by the the Board of Investment. Moreover, for some projects, depending on the location, the BOI may allow foreigners to hold a majority of shares in some promoted projects when it is deemed appropriate.
Under the Thai-U.S. Treaty of Amity, United States nationals (including companies) are permitted to hold a majority share in Thai companies carrying on a hotel business.
Step 2: Licensing
The number of licenses that should be obtained prior to commencement of business operation depends on the facilities and services provided by hotel.
Any hotel that has more than 4 rooms or may accommodate more than 20 guests must obtain a license to operate a hotel business from the Department of Provincial Administration for hotels located in Bangkok, or from the Provincial Governor’s Office for other areas.
Hotels that provide catering or restaurant services must obtain a Permit for Selling Food, Liquors and Cigarettes.
An entertainment permit must be secured by any hotel that provides conference room services or has places of entertainment, such as pubs, clubs, bars and spas.
About the Author (Author Profile)
Yulia began her legal career with a top-tiered law firm in Manila, Philippines and later moved to Bangkok working in several international law firms. Yulia’s areas of practice include real estate and construction, commercial law and intellectual property. Yulia is active in the Russian and expatriates community in Thailand and is a regular writer in several publications across the region in both English and Russian.