Hotels Across Thailand Face A Reality Check in 2026

32

Thailand Hotel News: Thailand’s hotel industry is stepping into 2026 with measured confidence but growing realism, as new industry data suggests that foreign visitor growth may fall short of official ambitions while cost pressures and uneven demand complicate recovery plans. Operators across the country are recalibrating expectations, balancing resilient long-haul demand against softness in key Asian markets and limited capability to raise prices, all while navigating rising operational expenses and intensifying regional competition.

The latest Accommodation Business Confidence Index, jointly compiled by the Thai Hotels Association and the Bank of Thailand, paints a nuanced picture of the sector’s outlook. Based on responses from 107 hotel establishments surveyed between December 15 and December 31, 2025, the index reveals that roughly half of hotel operators expect total foreign arrivals in 2026 to remain close to 2025 levels, at around 33 million visitors or maybe even less. This figure is well below the 36.7 million arrivals targeted by the Tourism Authority of Thailand, a gap that underscores the cautious mood prevailing among accommodation providers. This Thailand Hotel News report reflects how sentiment has become more grounded than aspirational.

Arrival Expectations Tempered by Market Shifts

Hotel operators cite several factors behind their conservative projections. While international travel continues to recover globally, Thailand’s tourism rebound is proving uneven across source markets. The Chinese market, once a dominant pillar of arrivals, remains notably soft, weighing heavily on overall forecasts. At the same time, growth from long haul markets such as Europe, the Americas, and parts of the Middle East is providing partial compensation, though not enough to fully offset weakness elsewhere.

According to the survey, nearly half of respondents believe that foreign arrivals in 2026 will show little to no growth compared with the previous year. This contrasts sharply with official targets that assume a robust rebound and highlights a widening gap between policy aspirations and on the ground business sentiment.

For many hoteliers, the focus has shifted from chasing headline arrival numbers to protecting margins and targeting higher spending segments that can sustain profitability in a more competitive environment.

Revenue Trends Offer Limited Relief

Financial performance toward the end of 2025 delivered mixed signals. Hotel revenues in the fourth quarter improved compared with the third quarter, supported by an uptick in long haul visitors and the positive effects of domestic tourism stimulus schemes such as Tiew Thai Kon La Khrueng and Tiew Dee Mee Kuen. These programmes encouraged domestic travel and spending, providing a welcome boost, particularly for four star and higher properties that benefited from stronger demand and greater pricing flexibility.

Despite this quarter-on-quarter improvement, overall revenue performance in the second half of 2025 lagged behind the same period in the previous year. Many operators reported that gains from long haul travelers were insufficient to fully compensate for declines in other segments, especially among mid-range and smaller hotels. As a result, revenue growth remains fragile, and confidence is closely tied to how demand evolves in the first half of 2026.

Early 2026 Brings Uneven Demand Outlook

Looking ahead to the first quarter of 2026, the confidence index suggests that foreign guest numbers are likely to decline compared with the same period a year earlier. The primary drag is expected to come from the Chinese market, which more than half of surveyed hotels anticipate will contract year on year. This decline is projected to be sharper than in other customer segments, reinforcing concerns about overreliance on a single source market.

In contrast, long haul arrivals are still expected to expand, particularly for four star and above hotels and properties located in southern resort destinations. These hotels are better positioned to attract higher spending guests seeking longer stays and premium experiences. As a result, upscale operators are generally more optimistic than their three star and below counterparts, who face greater exposure to price sensitive travelers and tour group fluctuations.

Room Rates Face Structural Constraints

The ability to raise room rates remains limited across much of the sector. Survey results indicate that most hotels expect only modest adjustments to average daily rates in the first quarter of 2026. Among four star and higher properties, more than one third plan to keep rates close to current levels, while around 35 percent expect to raise prices by just 3 to 5 percent. Only a small minority, about 4 percent, believe they can increase rates by 6 to 10 percent.

The outlook is more challenging for three star and below hotels. Over 43 percent of these operators expect room rates to decline compared with the same quarter last year, with roughly one in five forecasting a drop of at least 10 percent. Another 32 percent anticipate holding rates steady. This pricing pressure reflects intense competition, softer demand from group tours, and limited differentiation in a crowded market.

Occupancy Levels Show Stability Not Growth

Occupancy data further illustrates the sector’s balancing act. Average occupancy for January 2026 is projected at 74 percent, slightly lower than the 76 percent recorded in December 2025. December occupancy itself was stable both month on month and year on year, suggesting that demand has plateaued rather than accelerated.

Regional performance in December 2025 was broadly similar, with the Central region recording around 80 percent occupancy, the South approximately 79 percent, the North improving significantly to 78 percent, and the Eastern region holding near 76 percent. The improvement in the North was attributed to a higher number of events, larger scale activities, and more effective publicity. Overall stability was largely driven by four star and above hotels, while lower rated properties experienced softer conditions.

Festive Boost Lifts Short Term Sentiment

Tourism activity over the New Year holiday period provided a short-term morale boost. Countdown 2026 events held across multiple locations, including large scale celebrations under the Amazing Thailand Countdown banner, helped stimulate both domestic and international travel. These events reinforced Thailand’s appeal as a vibrant and welcoming destination, contributing to a more positive near-term outlook despite underlying challenges.

Industry leaders note that while such events are valuable, they must be complemented by sustained investment in destination development and marketing to deliver lasting benefits. One off spikes in demand, though helpful, are insufficient to address deeper structural issues affecting the sector.

Rising Costs and Competitive Pressures

Beyond demand concerns, hotel operators are grappling with rising costs. The increase in the social security contribution ceiling effective January 1, 2026 has added to labor expenses, particularly for small hotels in upcountry provinces. When combined with higher minimum wages and energy costs, these changes are squeezing margins and limiting the capacity of many businesses to invest in upgrades or staff development.

At the same time, competition from neighboring destinations is intensifying. Regional rivals are accelerating infrastructure projects, enhancing service standards, and diversifying tourism offerings. Thai hoteliers warn that without faster destination development and more comprehensive services, Thailand risks losing ground in key markets.

Industry Calls for Policy Support

In response to these pressures, the Thai Hotels Association is urging the government to maintain continuity in tourism policies throughout 2026. Key priorities include restoring traveler confidence, strengthening public relations and marketing, and organizing activities and events that can drive visitation to both primary and secondary cities. There is also a strong emphasis on attracting quality tourist segments through experience-based tourism, sustainable practices, and the promotion of health and wellness travel.

Hotel operators are seeking support across five main areas, including tourism and income stimulus measures, cost relief through energy and tax support, access to low interest financing for renovations, labor policy reforms to stabilize the workforce, and broader infrastructure development to ease congestion and enhance competitiveness. Managing the baht at an appropriate level is also viewed as critical to maintaining Thailand’s price appeal.

Taken together, the outlook for Thailand’s hotel sector in 2026 reflects a complex mix of resilience and restraint. While long haul demand and strong branding continue to underpin confidence, softer arrivals from key markets, limited pricing power, and rising costs present real challenges. Success in the year ahead will depend on adaptability, targeted policy support, and a renewed focus on quality driven growth that aligns industry realities with national ambitions.

References:

https://app.bot.or.th/BTWS_STAT/statistics/ReportPage.aspx?reportID=875&language=eng

https://www.thaihotels.org

For the latest on the hotel industry in Thailand, keep on logging to Thailand Hotel News.