Thai hotels brace for Q3 dip in foreign tourists as nearly one-third expect Chinese guests to drop over 30%

According to the July 2025 Hotel Business Confidence Index survey, Thai hotels reported an average occupancy rate of 58% in July, an increase from the previous month across all star ratings and nearly every region. The improvement was partly due to the summer school holidays in several countries, particularly in Europe.

The Central region recorded the highest average occupancy in July at 67%, up from 61% in June. The Eastern region was at 58%, slightly down from 58.7%, while the South rose to 56% from 45%, and the North climbed to 41% from 29.2%. Nationwide occupancy for August is forecast at 56%.

Labour shortages remained unchanged from the previous month. Most affected hotels reported that the shortage impacted service quality rather than their capacity to accommodate guests. In response to the government’s 400-baht daily minimum wage policy, many hotels have reassigned staff to multiple roles, opted for casual (job-based) hires instead of permanent employees, and cut non-labour costs such as energy and disposable supplies.

Thai Hotels Association President Thienprasit Chaiyapatranun said the index reflected a projected decline in Q3 foreign tourist arrivals compared with the same period last year, especially for hotels in the Central and Southern regions, where Chinese and short-haul markets are expected to contract more sharply than elsewhere.

Almost 30% of operators—nearly one-third—expect their Chinese guest numbers to fall by more than 30% year-on-year, largely due to safety concerns. Another 18% anticipate a drop of 21–30%, while 19% expect an 11-20% decline.

For the short-haul market, 28% of hoteliers forecast a decrease of 11-20%, 26% expect a drop of no more than 10%, and 19% foresee a decline of over 20%.

For the long-haul market, some growth is expected in Northern tourist areas. However, overall, 27% of operators predict a fall of up to 10%, 21% forecast an 11-20% decline, and 16% expect a drop of more than 20%.

Regarding the government’s “Half-Half Thai Travel” domestic stimulus scheme in Q3, 47% of hotels said it would have no effect on revenue, while 28% estimated it would boost revenue by no more than 5% year-on-year. In the Eastern region, more than a quarter of hotels expected a 6-10% revenue increase.

“Most hotels believe that safety perceptions, combined with economic uncertainty and income conditions in source markets, are key barriers to attracting foreign tourists. In addition, price competition remains a concern—four-star and higher hotels face price-cutting from foreign competitors, while hotels of three stars or less compete mainly within the domestic market,” Thienprasit said.