Hat Yai still struggling a month after floods, SMEs hit hard

Hat Yai remains deeply battered, with losses running into the hundreds of billions; one month after the floodwaters receded, recovery is still sluggish.

A month after the major flooding in Hat Yai, the water may have been gone for weeks, but the city’s physical and economic recovery remains slow. While some operators have reopened, many businesses — especially SMEs — are still unable to carry on. A key worry is that Malaysian visitors, the city’s main market, are giving Hat Yai a miss and travelling on to other destinations instead, as the city’s former appeal has yet to return, despite the Tourism Authority of Thailand (TAT) trying to win the market back.

Hat Yai flood damage in the “hundreds of billions” is only the beginning

The Hat Yai crisis has not only hit households and local businesses during the peak of flooding. The Songkhla Chamber of Commerce has estimated the overall impact could reach the hundreds of billions of baht.

In the hotel sector alone, repairs are estimated at around 3 billion baht (with renovation funds ranging from millions to 10 million baht per property). Lost revenue opportunities for November–December 2025 (B.E. 2568) are estimated at as much as 7 billion baht, as this is peak tourism season and the city was set to host major events — including a chamber of commerce meeting and the SEA Games — which had to be moved elsewhere. Many operators had stocked up heavily in anticipation, only for inventory to be destroyed by floodwaters.

Big players reopen first; local businesses lag behind

Although floodwaters have been down for nearly a month, business recovery has been very slow. The first to reopen — within one to two weeks — were mostly large operators, including convenience stores such as 7-Eleven, Café Amazon, and well-known eateries such as Chokdee Dim Sum and Bhurapha Bird’s Nest, as well as shops in Kim Yong Market.

 

Many relied on existing capital — in some cases their last remaining funds — to reopen as quickly as possible to generate income rather than face zero cashflow. In Kim Yong Market, more than 70% of shops are said to have reopened, with many rushing to restore premises to resume operations.
 

 

A Kim Yong Market operator said reopening quickly was essential to bring income back in — even though stall rent still had to be paid at the same rate. Traders used their own funds to rebuild and restock. Products such as cashew nuts and assorted nuts are sourced from Krabi, while snacks and chocolates are imported from Malaysia and Japan.

After reopening, many shops have pushed communications through their own channels, especially social media, to tell tourists they are back. If tourists still do not return, some stores are also offering delivery services to help sustain revenue during the slow period.

 

Only 50% of hotels reopen; SMEs struggle to recover

By contrast, restaurants, spas, pubs and bars — the “colour” of Hat Yai tourism in the inner city — have reopened at only around 20%, as most are SMEs.

For hotels, the Hat Yai–Songkhla Hotel Association estimates that about 50% of hotels in Hat Yai, Songkhla, have resumed operations. Many others are still cleaning up and refurbishing to return to normal. Some hotels are still deciding whether to reopen or suspend operations for now.

One long-established hotel that had operated in Hat Yai for decades has reportedly decided not to continue, due to the high renovation costs and uncertainty over whether flooding could recur in 2026 (B.E. 2569) — now the biggest concern among operators.
 

 

Government aid seen as mismatched to real recovery needs

Dr Sittipong Sitthipatprapha, president of the Hat Yai–Songkhla Hotel Association, said recovery has been slow partly because the floods damaged electrical systems, ceilings and building infrastructure. Much of the area still requires extensive clean-up — buildings, homes, business premises — as well as public roads where large volumes of rubbish have accumulated.

He said the government should deploy additional personnel and heavy machinery to speed up the clean-up. If local communities, districts or the province are left to manage alone, they simply do not have enough capacity. If recovery is left to “natural” pace, he estimated it could take until at least mid-2026 to recover.

He added that current relief measures do not match the scale of real losses. Affected people typically receive a combined package of about 129,000 baht, including 9,000 baht in flood compensation and a 100,000-baht unsecured recovery loan with one year of interest-free terms. He said this might be enough for very small vendors, but is far from sufficient for businesses operating from shop-houses, cafés or restaurants with high-value equipment.
 

 

Hotels: 300 properties, but inner-city occupancy still just 10–20%

Initial assessments in the hotel and tourism sector suggest Hat Yai has around 300 hotels with more than 30,000 rooms. At present, only about 50% — roughly 15,000 rooms — have reopened informally.

Hotels in the central area (Niphat Uthit 1, 2 and 3), a strategic zone for Malaysian tourists, are seeing extremely low occupancy of just 10–20%, while hotels on the outskirts that were not flooded have higher occupancy of 50–80%.

Worry: Malaysians now treat Hat Yai as a pass-through

Business recovery in Hat Yai now falls broadly into three groups:

• Those with capital who can refurbish and reopen quickly
• Those who have walked away — often SMEs, legendary long-running eateries and medical clinics that have shut permanently due to unsustainable burdens
• Those at a crossroads — with morale but lacking funds, and unsure whether to reinvest, partly due to worries over land taxes despite having no income

Hat Yai is also facing what operators describe as “capital flowing out, new capital not coming in”, driven by fears of repeated flooding. Malaysian tourists — historically more than 90% of the market — are said to be back at only 50–60%, and many now drive through Hat Yai to other destinations such as Phatthalung, Ao Nang (Krabi) and Phuket, rather than staying in Hat Yai.

Some visitors remain uneasy about conditions in the city. Others who still want to visit arrive but do not know what to do next, because Hat Yai’s inner-city tourism zone (Niphat Uthit 1–3) has yet to recover. Massage shops and nightlife venues are still largely closed. Visitors staying in hotels feel the quietness — a stark contrast to the old atmosphere.

The current lull is described as the loss of Hat Yai’s “tourism ecosystem”. In the past, tourists — especially Malaysians — deliberately came to Hat Yai via the Sadao border checkpoint. At present, about 10,000 people a day pass through Sadao, and many continue on to other provinces rather than stopping in Hat Yai.

Even so, businesses hope the Chinese New Year festival in February will become a “kick-off” point for major activities to draw tourists back and rebuild confidence. TAT has been continuing tourism stimulation efforts since the waters receded, Dr Sittipong said.
 

 

TAT’s 2026 push to revive Hat Yai tourism

Thapanee Kiatphaibool, Governor of the Tourism Authority of Thailand (TAT), said Hat Yai’s tourism revival plan is being driven under the concept “Smile@Hatyai — bringing smiles back to Hat Yai”, with coordinated cooperation across sectors to accelerate economic recovery, raise safety standards, rebuild traveller confidence and bring the city back as quickly as possible.
 

After the flood, TAT launched the “Amazing Hatyai Happy Bus” project — two free bus routes — to facilitate tourist travel and stimulate the local economy in the Hat Yai urban area from 24 December 2025 to 28 February 2026. TAT expects at least 15,000 users. The programme aims to address transport disruption after many vehicles in Hat Yai were flooded and require time to repair or replace.

Beyond New Year activities, TAT is preparing Chinese New Year events and additional joint marketing initiatives with partners to boost travel and spending, including:

Amazing Thailand Passport Privilege @ HATYAI at Hat Yai Airport (January–February 2026), offering special discounts via a website plus chances to win vouchers and community souvenirs during Chinese New Year

Hat Yai Super Deal (January–May 2026) with online travel agents (OTAs), offering exclusive bundle packages combining airfare and accommodation in a single booking. A key condition is that participating accommodation must be located in Hat Yai district, with booking and travel windows limited to January–May 2026.

The focus is on ASEAN markets, especially Malaysia, Singapore and Indonesia. TAT targets 10,000 pax for participation. For 2026, TAT expects recovery efforts to help draw 4.63 million Malaysian visitors to Thailand, up 3% from 2025, when Malaysian visitors totalled 4,520,856, down 8.71%.

Private sector urges “strong medicine” to rescue Hat Yai

While Hat Yai has yet to fully recover, the local private sector is calling on the government to step up urgent measures before the economic crisis deepens.

Dr Sittipong said businesses want debt repayment moratoriums to help them survive during recovery, and soft loans at 1.5% interest, similar to measures used in the three southern border provinces. They also want customs processes upgraded to online systems to speed up vehicle entry into Hat Yai, as queues can currently take 2–3 hours during festivals. He urged the government to elevate Hat Yai recovery to a “national agenda” and keep activities running through Songkran.
 

 

Songphon Jangsiriwatanathamrong, president of the Songkhla Chamber of Commerce, said this flood was not a superficial shock — it caused deep structural damage to the local economic system, particularly inner-city shops and businesses hit hard down to electrical systems, building engineering works and ceilings, which are major barriers to reopening. At present, fewer than 20% of inner Hat Yai businesses have been able to resume operations.

Given severe liquidity shortages for repairs and restoration, he said that to achieve a V-shaped recovery, the government should review soft loan limits, which were originally set at around 1 million baht and do not reflect real losses. He proposed increasing recovery loan ceilings up to 40 million baht to adequately fund renovations, with a special interest structure: 0% for the first six months, then 1.5% per year for five years, mirroring measures in the three southern border provinces.

He also proposed reviving tourism via a Kon La Krueng Plus-style scheme limited to spending in Hat Yai and nearby areas, and suggested issuing an emergency decree related to flooding to allocate urgent funding for “quick win” flood prevention projects — such as dredging drainage canals and completing floodways within 1–5 years — instead of waiting for normal budget cycles in 2027, which he warned could be too late.

Ultimately, restoring Hat Yai is not only about rebuilding structures — it is about rebuilding confidence and bringing back the heart of this key economic city.

Credit: Thansettakij