Thai Hotels Association to challenge nationwide 400-baht minimum wage in court

Thienprasit Chaiyapatranun, President of the Thai Hotels Association (THA), has revealed that the association plans to file a petition with the Administrative Court to review the legality of the National Wage Committee's announcement on minimum wage rates (No. 14), issued on June 17, 2025. 

The announcement stipulates a nationwide minimum wage of 400 baht per day for hotels and service businesses, effective from July 1, 2025, without regional or provincial variation.

The association views this new regulation as severely detrimental to the hotel industry, particularly in areas with fewer tourists and struggling economies. 

As a result, the THA finds it necessary to bring this issue before the Administrative Court within 90 days of the announcement, or around next month, in hopes of prompting a review and potential withdrawal of the nationwide 400 baht minimum wage for the hotel sector.

The THA also emphasised that this new minimum wage directly impacts hotel operators in areas with low tourist numbers and underperforming local economies. 

The association further believes the announcement could be legally questionable.

Since the Wage Committee decided to increase the minimum wage to 400 baht for hotels nationwide, effective July 1, 2025, the announcement has sparked concerns and opposition from hotel associations across the country. 

Many have sent letters to the THA president expressing their opposition and urging reconsideration of the policy. The hotels most affected are those with at least 50 rooms or rated two stars and above.

Impact of Minimum Wage Increase on the Hotel Industry Across Regions

Eastern Region (Chanthaburi, Trat)

Chanthaburi and Trat are facing significant increases in the minimum wage, with Chanthaburi's rate rising from 352 baht to 400 baht (an increase of 13.6%) and Trat from 354 baht to 400 baht (an increase of 13%). The average income of businesses in these areas has yet to fully recover from the COVID-19 crisis. 

There are ongoing challenges regarding purchasing power, both from domestic and international markets, and increasing operational costs.

The ongoing uncertainty along the Thai-Cambodian border is directly affecting the tourism sector, particularly with Cambodian tourists and international travellers connecting through the region. 

Additionally, long-haul and short-haul markets have begun to slow down or cancel their travel plans. 

The specific minimum wage adjustments for certain sectors may create imbalances in competition, inequality among the workforce, and additional burdens for medium and small businesses, particularly during the low season when income drops. 

Furthermore, many areas still face challenges related to the quality of the labour force.

Western and Southern Regions

The Hotels Associations in western and southern regions disagree with the uniform minimum wage increase across the country. However, they support the idea of region-specific minimum wage adjustments, as the cost of living differs greatly across areas. 

They argue that the primary objective of setting a minimum wage is to improve the standard of living for the poorest and most vulnerable members of society, while also encouraging the population to enter the workforce. The minimum wage should not be set by industry or occupation.

The government should take into account the actual wage levels employees are currently receiving, alongside cost-of-living indices, inflation rates, production costs, the price of goods and services, labour productivity, GDP, and the economic and social conditions of each region. 

Additionally, businesses’ capacity to pay through the provincial wage committees should be considered. A sudden, significant wage increase would impact businesses' costs, investments, and lead to higher inflation, while offering only limited benefits to consumer spending by workers receiving the higher wages.

Businesses that rely heavily on labour, particularly in the hospitality and food services sectors, where minimum wage workers account for over 30% of the workforce, will face increased costs. Furthermore, there will be challenges for supervisory-level staff, as they will need to adjust their wages to maintain a salary gap between entry-level and senior positions. 

Given that the minimum wage has already been adjusted for 2025, further adjustments this year are unnecessary. 

The association recommends that the wage be adjusted annually to allow businesses to better plan their budgets.

Lower Northeastern Region (Chaiyaphum, Ubon Ratchathani)

Members of the THA in the Lower Northeastern region strongly oppose the significant increase in the minimum wage, especially for the hotel and food service sectors. 

These industries, including seminar services, have different employment structures and production costs compared to other businesses, relying heavily on seasonal labour. 

The wage increases, which account for 25-30% of total revenue, will have a particularly severe impact.

In 2025, during the first two quarters, the occupancy rates, food service usage, and seminar bookings in the Lower Northeastern region are expected to remain similar to the previous year. 

The minimum wage adjustment will lead to a 6-8% increase in operational costs, potentially resulting in reduced staffing levels or delays in new hiring, as well as higher prices for goods and services.

This wage increase could lead tourists to consider destinations with lower operational costs. The lack of consideration for regional and business-specific wage capabilities may ultimately result in the closure of businesses and layoffs in medium and small-sized hotels.

Lower Northern Region (Phitsanulok, Sukhothai, Tak)

The "sector-specific and blanket enforcement" policy could create "structural distortion and inefficiency" in the regional economy, particularly in areas where cost and revenue structures are not aligned with Bangkok or major cities.

The issue of structural asymmetry arises as the minimum wage prior to the adjustment was 347–352 baht/day, while other sectors such as retail, logistics, and factories are not subject to the new wage regulations. This discrepancy could lead to wage arbitrage and labour migration between sectors within the same region.

The wage increase from 352 to 400 baht (a 13.6% rise) will raise labour costs by 48–53 baht/day in medium-sized hotels, where operational staff typically make up 60–70% of the workforce. 

This immediately results in a 4-6% increase in overall labour costs, excluding the ripple effects of wage adjustments for higher-level positions.

The cost structure misalignment further complicates matters, as labour costs account for 30–35% of operational expenses, OTA commissions represent 25% of room revenue, and utilities can reach 15%. Hotels are unable to adjust room rates (ADR) quickly enough to cover rising costs due to demand elasticity and pressure from online pricing.

For example, hotels in Phitsanulok have an average cost per key of 850–1,200 baht, while actual room prices during certain seasons only range between 1,200–1,500 baht, leaving the GOP margin under 10%. A sudden increase in labor costs could push the GOP margin below the break-even point.

Regional Vulnerabilities: In areas like Tak, where small hotels with 30 employees see over 90% of their workforce affected by the wage increase, and in Sukhothai, where medium-sized hotels with 90 employees have 25% impacted, the average occupancy rate remains below 50%, especially in non-tourism driven cities.

These conditions leave business owners unable to absorb the cost shock fully. Many hotels are still burdened with accumulated debt from the COVID-19 period and face limited cash flow. 

The sharp rise in labour costs is expected to lead to reduced working hours, fewer staff per department, the termination of subcontracting or outsourcing, and lower service standards to control costs.

Hat Yai, Songkhla

The Hat Yai, Songkhla Hotels Association reports that over 100 hotel operators have been impacted by the minimum wage increase. 

The tourism sector in Songkhla has shown a downward trend compared to the previous year, and the wage hike in this context has significantly affected the operational costs of hotels in the province. 

This has resulted in layoffs and a halt in hiring new staff, as businesses struggle to bear the increased costs.

Policy Proposals from Various Sectors

Hotel associations have put forward several policy recommendations to mitigate the impact and make the policy more adaptable to the economic context of each area. 

The key proposals include:

• Postpone the minimum wage increase until the overall tourism economy in Thailand improves. A thorough study on the impact of the wage increase should be conducted before making a final decision.
• Implement region-specific minimum wages, considering the cost of living and the financial capabilities of each business.
• Establish a phased wage adjustment period of 6-12 months for provinces where the base wage is below 360 baht/day.
• Uniform enforcement across key sectors within the same province, if the wage increase is to be implemented, to reduce the outflow of labour between sectors.
• Empower provincial wage committees to jointly consider the appropriate timing and enforcement mechanisms based on the real cost structures of local businesses.

Support measures for SMEs, including:

• Temporary payroll subsidies for SMEs with over 50% of employees impacted by the wage increase.
• Utility cost relief, such as reduced electricity rates or power subsidies for service businesses.
• Tax credits for businesses that maintain full employment levels.

While hotel associations do not oppose the principle of improving workers' quality of life, they warn that a rigid policy that fails to align with local economic conditions could undermine the foundation of the tourism industry. 

Therefore, they urge the THA and relevant authorities to carefully consider these proposals to strike a balance between protecting workers and ensuring the sustainability of service industries in rural areas.