Thai Govt To Crack Down On Unlicensed Hotels

[Ricardo]

The trade-group appears to want to equate non-membership of their group, with being unlicensed or non-tax-paying, and the Interior-Ministry appears to be leaping into action, at their command !

In their rush to please the owners of up-market hotels, the men-from-the-ministry appear to forget the interests of budget-travellers, whether farang back-packers or long-stay or residents as well as the average Thai domestic-tourist ? So much for standing-up for the poor !

Or perhaps now that 'all Thais will be rich after six months', they too all stay in 4-5-Star hotels & resort/spas ? So how to explain the boom, in camp-sites and home-stays, which I can see here in the North-West ?

With so much hot-air, I feel yet-another ballon-festival coming-on !

[alchik]

Just what is needed! Europe in recession and Thailand is raising the prices of the hotels! Keep it up guys - I am looking forward to those empty beaches.

[Boss]

Actually this year in april, I could not extend my workpermit as a manager of a small guesthouse in Ao Nang, which I have had for 8 years .

The reason was that the establishment do not have a hotel license. Nobody, or bor tor , or bor jor or Amphoe would issue a licence unless more than 60 rooms...... Ridiculous !!!

Tired of doing busines in Thailand

[technologybytes]

Again, this is about government being seen to be in control. It's all BS really, sure in the west the idea of a license ensures standards of safety etc, here it means nothing because in my experience (traveled extensively around Thailand for the last 12 years) the hotels that have the worst health and safety issues are often the big licensed hotels.

For example, its the big licensed hotels that often lock the doors to the fire escape. I saw that just 2 months ago in big name Bangkok 4 star hotel at Asoke. I don't see it in smaller, probably unlicensed hotels.

Don't be fooled into thinking that this is about helping the consumer, the consumer in Thailand is never valued. It's about money and opportunities for corruption.. nothing more, nothing less.

[harleyd61]

we will see what happens

[PhilipCook]

Wonder what actually causes them to create this crackdown. There doesn't seem to be any loss of face in the State Railways of Thailand bleeding taxpayer cash profusely yet the unlicensed hotels are causing a problem? Sounds like someone special asked for a favor to shore up their business interests by cutting the limbs of the small time operators. I have a novel idea for the powers that be, use shame(public awareness) as a tactic. Take this example, in my home state I can see the tax and taxes paid by anyone who owns property. I can see who has alot of it, who isn't paying on time, and so on. I don't know if such a open and transparent online system exists here but I doubt it. Unlicensed businesses permeate the country, hotels are just a sliver of the pie. If you want to go after one, why not make it country wide, any business operating without a required license has a 90 day period to come up with the license or close. Don't pick and choose industries willy nilly(haphazard or spontaneous way). And after 90 days go on a witch hunt in a willy nilly fashion

[misterme]

I am not sure why people are against this. Unlicensed hotels are by definition not licensed and as such would not pay any taxes, not be checked for health and safety compliance etc. If they want to be operators they should apply for the proper permits and pay the appropriate taxes and other licensing dues. It is very strange on TV where on the one hand people consistently bemoan the lack of law and order, and here is an article trying to curve some of this issue in the hospitality sector and it is met by skepticism and ridicule.

Your comment, while sounding good, is incorrect in several points.

My post is to help clarify the small business situations that independent guesthouses face. The problem is that we are stuck between policies that refuse to be brought in line with reality.

An unlicensed hotel, in Patong for instance, MUST have an operating certificate. Annual checks, on cleanliness, safety (fire escapes, extinguishers), signage, AND RECIEPTS FOR TAX PAID are a few of the things that must be presented to Renew for a new year.

We pay for the proper permits, personal income tax, municipal tax, sign tax, garbage and sewer tax. But, we are still called illegal.

We are safe, clean, highly rated by our guests, but we are not in the club. The hotel fees are NOT 3000THB per year. The municipal taxes alone would quadruple of quintuple. We couldn't operate at a price point that could fill our rooms if we were forced to convert from a guesthouse to a hotel. And of that municipal tax, most of it is not being put back into the community... everyone knows it's a funnel to someone's pocket.

The tourism market in many cities would crumble if they were able to do this. Of course, they cannot, so it's no big deal.

Don't believe their hype. Just because they say we're not legal DOES NOT MEAN exacty that. They think that if they close the small shops, the average room rates will rise. I predict the opposite. Then the cheap charlies will have to stay at the hotels, and the hotels will be forced to drop to the new market rates that were being assumed by the small independents.

Most of us are running certified and legitimate businesses. Believe it.

[misterme]

Here's another example of how crazy the system is...

... in our rental lease (and most here in Phuket and around the country) the rentor must pay the annual building tax for the owner. This tax is about 10-15% of rent payable, and is to be paid by the owner as a tax on their rental income. But us owners have this forced on us, while they collect the rent, and we also pay their tax on the rent we pay. Our buildings generate almost 200,000THB rent per month to the owner. I WOULD GLADLY PAY 3000THB to comply with their law, if they could save us the appx 100,000THB (we get the fee lower because we 'zigzig') of the land owners' tax burden that they impose on us .

[Stradavarius37]

I hope they don't mean the quality establishment I pass every day on the way to work - the "GIGS TOWN" Hotel. Where would all the cheaters go for their afternoon boink?

[monty1412]

Illegal hotels have hurt the licensed operators by luring a large number of tourists with low prices.

Perhaps they might want to give some thought to this statement.

They want to drive up prices, yet, it seems, that many tourists flock to the cheaper hotels. So if they drive prices up, perhaps many tourists will go elsewhere, rather than pay more. Prices in Thailand are already much higher than they uised to be. Thailand is no longer the bargain it once was.

As for Singapore, I stay at a very nice hotel at $99 a night (near Clarke Quay). Granted, it's a small room, but it is clean and has a good bed and shower.

Not the Robertson Quay by chance ??

[Arkady]

They are going to create fair competition by shutting down 62.5% of the nation's hotels. That will be interesting to see.

The really problem is probably that the unlicensed hotels aren't paying bribes to the Interior Ministry to get licensed without meeting the required standards. A revenue opportunity is being missed by the franchisee system known as the Thai government which could justify raising the cost of the franchises in future.

[khunken]

Yes, screw the customer again.

Surely the unlicenced hotels do what any unlicenced (or illegal) business does here - pay the BIB. Just another form of fee-paying.

[arrowsdawdle]

I am not sure why people are against this. Unlicensed hotels are by definition not licensed and as such would not pay any taxes, not be checked for health and safety compliance etc. If they want to be operators they should apply for the proper permits and pay the appropriate taxes and other licensing dues. It is very strange on TV where on the one hand people consistently bemoan the lack of law and order, and here is an article trying to curve some of this issue in the hospitality sector and it is met by skepticism and ridicule.

Hopefully if this can done properly, we will minimize any fire and safety issues or other health related issues in smaller unregulated hotels.

Well, let's take your safety issue. Five dead in Chiang Mai hotel within a month or so, guy electrocuted grabbing a railing at Phuket hotel swimming pool, just two that come to mind among the forgotten others...and 63% of the hotels in Thailand are illegal. One would think with the significant majority of hotels being illegal, even if safety were consistent at all properties, then 63% of reported incidents would be at illegal hotels. But you are suggesting that the 63% of illegal hotels are not as safe so we should see some percentage in excess of 63% for the number of incidents in illegal hotels if legal hotels are safer. Anybody have a number on the breakdown of incidents per legal vs illegal hotels? Can anybody recall the last time an illegal hotel was in the news as unsafe? Just asking.

[spectre324]

My question is what makes them illegal ? not paying to be a part of an association ?

7,500 out of 12,000? probably didn't pay "tea money" yet!

[fasteddie]

I am not sure why people are against this. Unlicensed hotels are by definition not licensed and as such would not pay any taxes, not be checked for health and safety compliance etc. If they want to be operators they should apply for the proper permits and pay the appropriate taxes and other licensing dues. It is very strange on TV where on the one hand people consistently bemoan the lack of law and order, and here is an article trying to curve some of this issue in the hospitality sector and it is met by skepticism and ridicule.

Hopefully if this can done properly, we will minimize any fire and safety issues or other health related issues in smaller unregulated hotels.

Oh please! as if any safety standards will be upheld, TIT. This is just an attempt by big business to drive the small man out of business and force people to stay in bigger places owned by the rich.

[fasteddie]

I am not sure why people are against this. Unlicensed hotels are by definition not licensed and as such would not pay any taxes, not be checked for health and safety compliance etc. If they want to be operators they should apply for the proper permits and pay the appropriate taxes and other licensing dues. It is very strange on TV where on the one hand people consistently bemoan the lack of law and order, and here is an article trying to curve some of this issue in the hospitality sector and it is met by skepticism and ridicule.

Hopefully if this can done properly, we will minimize any fire and safety issues or other health related issues in smaller unregulated hotels.

Good post, especially the TV poster bit

Ah! the businessman speaks.

[moe666]

Wow! Another crackdown!

More like a Hub of crackdowns!

This gets old

[HerbalEd]

Illegal hotels have hurt the licensed operators by luring a large number of tourists with low prices.

Perhaps they might want to give some thought to this statement.

They want to drive up prices, yet, it seems, that many tourists flock to the cheaper hotels. So if they drive prices up, perhaps many tourists will go elsewhere, rather than pay more. Prices in Thailand are already much higher than they uised to be. Thailand is no longer the bargain it once was.

As for Singapore, I stay at a very nice hotel at $99 a night (near Clarke Quay). Granted, it's a small room, but it is clean and has a good bed and shower.

You can easily get the same quality and the same price in Thailand.

[samuibruno]

also states house rentals

The ministry estimates that of the more than 12,000 hotels nationwide, 7,500 are illegal. They are mainly guest houses, serviced apartments, and house rentals in major tourist destinations.

which could mean that if you are renting your villas you may be a target also

[Thai at Heart]

So Mr. Economics Einstein.

It will drive up room rates.

What happens if all 7500 supposedly illegal hotels join? Nothing, supply stays the same

What happens if all 7500 don't join, and the remaining 5000 stays the same? All 5000 are full, can charge more, but there isn't sufficient capacty to house everyone, so less people travel. Great, so half the hotels in a town are full to bursting but all the other businesses die because there are half as many tourists around.

Does he think hotel room rates are like cigarettes or something? Does this idiot know anything about elasticity of demand or the velocity of money. If they arbitrarily close half the hotels in a resort, the place becomes a ghost town and everything dies. If everyone joins, the total of rooms stays the same, the costs of the hotels goes up a tiny bit, but the competition is still fierce, so prices won't move.

[oldsailor35]

Well, there's one thing for sure.

Thailand is the 'CRACKDOWN' capital of the world. So all-in-all they have achieved something. Congratulations to LOS !

[CantSpell]

They must have a yearly crackdown planning system as they're coming up with the same crap ideas years on years....

Edited December 7, 2012 by CantSpell

[petedk]

Previously, Surapong said room rates in Bangkok were quite low compared with other major cities in Asia. Early this year, the average rate was US$97 (Bt2,970), representing only 40 per cent of the real cost. Meanwhile, the average rate in Singapore was $232, Hong Kong $242, Tokyo $164, and Seoul $149.

Just read in another newspaper that the Centara Group plan to open 30 budget hotels with rooms costing 1000 to 1200 Baht per night.

What does Surapong say to that?

[lemoncake]

Previously, Surapong said room rates in Bangkok were quite low compared with other major cities in Asia. Early this year, the average rate was US$97 (Bt2,970), representing only 40 per cent of the real cost. Meanwhile, the average rate in Singapore was $232, Hong Kong $242, Tokyo $164, and Seoul $149.

Just read in another newspaper that the Centara Group plan to open 30 budget hotels with rooms costing 1000 to 1200 Baht per night.

What does Surapong say to that?

Perhaps it is the reason for trying to remove the competition for centara

[HHBM]

If being licensed would ensure safety, etc., then that would be one thing. The wonderful thing about the internet is that a lot of information is available to help consumers make their own choices. If you have good service, tell a friend. If you have bad service, tell everyone. I guess this is why they need such stringent laws against slander and libel, eh?

Edited December 7, 2012 by HHBM

[simon43]

As other posters have pointed out, this news is rather confusing.

I quote:

The ministry estimates that of the more than 12,000 hotels nationwide, 7,500 are illegal. They are mainly guest houses, serviced apartments, and house rentals in major tourist destinations.

By the definition of the applicable Thai laws, a guest-house or serviced apartment or house is not a hotel. It is therefore not required to adhere to the laws which apply to accommodation which is defined as a hotel, (but it may be required to adhere to laws which are applicable to guest-houses, serviced apartments etc).

I have owned (or still own) 5 different accommodation establishments in Thailand. By Thai law definition, they are all guest-houses, and therefore the applicable regulations to operate them as guest-houses are strictly followed by me. So I have a building licence, company registration, alcohol, restaurant and cigarette licence, business licence, pay all taxes etc etc etc. I do not have a hotel licence and do not require one.

Smaller guest-houses (3 rooms or less) do not even need to adhere to guest-house regulations because they are by Thai law definition, a private home with letting rooms.

My question is what makes them illegal ? not paying to be a part of an association ?

Some thing like that. I've applied on various occasions to join the relevant hotel/hospitality associations. I've been refused on each occasion because my 'hotel' is not a hotel by Thai law definition. It is a guest-house.

So I suspect that this news report is more about sour grapes than real news

Simon

[Meetoo]

As other posters have pointed out, this news is rather confusing.

I quote:

The ministry estimates that of the more than 12,000 hotels nationwide, 7,500 are illegal. They are mainly guest houses, serviced apartments, and house rentals in major tourist destinations.

By the definition of the applicable Thai laws, a guest-house or serviced apartment or house is not a hotel. It is therefore not required to adhere to the laws which apply to accommodation which is defined as a hotel, (but it may be required to adhere to laws which are applicable to guest-houses, serviced apartments etc).

I have owned (or still own) 5 different accommodation establishments in Thailand. By Thai law definition, they are all guest-houses, and therefore the applicable regulations to operate them as guest-houses are strictly followed by me. So I have a building licence, company registration, alcohol, restaurant and cigarette licence, business licence, pay all taxes etc etc etc. I do not have a hotel licence and do not require one.

Smaller guest-houses (3 rooms or less) do not even need to adhere to guest-house regulations because they are by Thai law definition, a private home with letting rooms.

My question is what makes them illegal ? not paying to be a part of an association ?

Some thing like that. I've applied on various occasions to join the relevant hotel/hospitality associations. I've been refused on each occasion because my 'hotel' is not a hotel by Thai law definition. It is a guest-house.

So I suspect that this news report is more about sour grapes than real news

Simon

Same here /// Having only 4 rooms I was refused to get a hotel permit from the related business ministry telling me thaat any place with 4 rooms or less does not qualify.! However it is interesting to now read another poster saying he was refused as he did not meet the required 60 ROOMS ...????

[lemoncake]

As other posters have pointed out, this news is rather confusing.

I quote:

The ministry estimates that of the more than 12,000 hotels nationwide, 7,500 are illegal. They are mainly guest houses, serviced apartments, and house rentals in major tourist destinations.

By the definition of the applicable Thai laws, a guest-house or serviced apartment or house is not a hotel. It is therefore not required to adhere to the laws which apply to accommodation which is defined as a hotel, (but it may be required to adhere to laws which are applicable to guest-houses, serviced apartments etc).

I have owned (or still own) 5 different accommodation establishments in Thailand. By Thai law definition, they are all guest-houses, and therefore the applicable regulations to operate them as guest-houses are strictly followed by me. So I have a building licence, company registration, alcohol, restaurant and cigarette licence, business licence, pay all taxes etc etc etc. I do not have a hotel licence and do not require one.

Smaller guest-houses (3 rooms or less) do not even need to adhere to guest-house regulations because they are by Thai law definition, a private home with letting rooms.

My question is what makes them illegal ? not paying to be a part of an association ?

Some thing like that. I've applied on various occasions to join the relevant hotel/hospitality associations. I've been refused on each occasion because my 'hotel' is not a hotel by Thai law definition. It is a guest-house.

So I suspect that this news report is more about sour grapes than real news

Simon

Same here /// Having only 4 rooms I was refused to get a hotel permit from the related business ministry telling me thaat any place with 4 rooms or less does not qualify.! However it is interesting to now read another poster saying he was refused as he did not meet the required 60 ROOMS ...????

I just double checked my license and it is license to "room for rent", now what is the difference between hotel license and room for rent license? and how would they crack down on say my hotel if i do indeed have a license to rent rooms, which is exactly what i do-rent rooms.

The more i think about it, the more i think this crackdown is aimed at places which are not operated under a company name and do not have any licenses.

A huge number of 500baht guest houses, do not display any licenses, only company registration or company reservation.

Also very possible, some of the bigger places, with 100 plus rooms, only have license to "rent rooms" but should have license for hotel.

Lets just wait and see, but i do not think any of us who run small businesses with license to "rent rooms" would be a target, unless of course they find something else to pick on.

Lately i noticed some "smart" people adding their "business" on booking engines like Agoda, but what they do is, simply rent rooms in a variety of condo's so not only they are not licensed, no company, but also do not really have a business.