Tourism loses competitive edge as Bangkok hotel occupancy declines
The outlook for Bangkok's hotel market in the second half of 2025 remains concerning and will be closely monitored, amidst various signals within the tourism sector.
Knight Frank Chartered (Thailand) Ltd. has reported on the hotel business landscape in Bangkok, noting a sluggish first half of 2025. Occupancy rates dropped by 3.7 percentage points to 75.1%, while the average daily room rate (ADR) increased slightly to 4,260 baht.
The focus for the latter half of the year will be on absorbing over 3,283 new rooms set to open before the end of the year, contributing to a total of more than 5,100 new rooms for 2025, marking the fastest annual growth since the Covid-19 pandemic.
A significant drag on performance was the sharp decline in Chinese tourist arrivals, which fell by nearly 35% year-on-year in the first half of 2025. While China remains Thailand’s main source of tourists in terms of volume, this slowdown heavily impacted mid-range hotels and those dependent on tour groups.
Notably, Chinese outbound travel has remained strong, with countries like Vietnam and Japan welcoming 2.7 million and 3.13 million Chinese tourists, respectively, in the early months of 2025.
These figures suggest that the demand for Chinese tourism is not lacking but that Thailand has lost its competitive edge compared to other destinations, driven by perceptions of safety, negative media coverage, and changing tourist preferences.
Domestic tourism is not compensating for the decline in foreign markets. Although measures such as visa exemptions and improved regional flight connections continue to support tourism, the government has started introducing domestic tourism stimulus programs, including the “Half-Half Thai Tourism” initiative and new tax incentives to boost local tourism, particularly in the low season during the second half of the year.
Recovery will largely rely on market growth and increased airline capacity. Positive growth from India (14.6%) and Russia (11.1%) remains a bright spot, alongside moderate momentum from ASEAN markets. However, these growths are insufficient to offset the substantial decline in arrivals from China and South Korea.
In this context, the second half of 2025 is expected to see revenue per available room (RevPAR) driven primarily by “tourist volume,” supported by strong occupancy rates during peak months like November and December, bolstered by the year-end holidays and MICE demand (meetings, incentives, conferences, and exhibitions).
However, pressure on ADR is likely to persist, especially in the mid-range hotel segment, where competition from new entrants will limit pricing power. Room rate performance will increasingly depend on brand value, effective distribution strategies, and prime locations.
For the luxury hotel segment, stability is anticipated, with demand driven by high-income travellers from the region and long-haul tourists. Although price growth will remain limited and competition will intensify in the high-end sector, the pricing advantage compared to regional hubs like Singapore, Hong Kong, and Tokyo may help attract experience-driven tourists seeking value at competitive prices.
Hotel Occupancy Rates in Bangkok Show Decline
In the first half of 2025, Bangkok's tourism sector continued its recovery, welcoming approximately 15.5 million international tourists, a modest 0.6% year-on-year (YTD) increase. However, the number of visitors remains 11.3% lower than the pre-pandemic peak of 2019, reflecting the ongoing impact of changes in travel patterns.
The hotel market in Bangkok showed signs of recovery during the first half of 2025, although the average occupancy rate dropped to 75.1%, a decrease of 3.7 percentage points compared to the same period last year. January and February saw strong performance, with occupancy exceeding 81%.
However, occupancy declined steadily thereafter, reaching 69.8% in June, the lowest in over a year. This downward trend reflects the impact of the increasing number of hotel rooms, shorter stays, and a reliance on short-haul markets with lower potential for high returns.
The ADR increased by 3.3% year-on-year to 4,260 baht in the first half of 2025, compared to 4,121 baht during the same period in 2024. The highest ADR was recorded in January, while May and June saw the lowest. Several months in the middle of the year experienced changes that were either flat or worse than the previous year. The limited growth in ADR, combined with the decline in occupancy rates, put pressure on RevPAR, particularly in the second quarter.
China and Malaysia Lead as Major Markets in the First Eight Months of 2025
In terms of supply, seven new hotels opened in the first half of 2025, adding 1,906 rooms to the market. Notable openings include the Grand Centre Point Lumpini (512 rooms) and Four Points by Sheraton (333 rooms). These launches span all hotel categories, from luxury properties such as Aman Nai Lert and Grand Centre Point to mid- to upper-tier hotels like Queensland Hotel and The Quarter. Additionally, 12 more hotels with a total of 3,283 rooms are expected to open in the second half of 2025, highlighting the continuous growth of new projects and intensifying competition.
Many of the new hotels are located in emerging or newly developed urban areas. Domestic brands such as The Quarter and Queensland continue to expand aggressively in the mid-to-upper-tier segment, while international hotel chains like Radisson and Four Points are increasing investments in the market. This reflects strong confidence in the long-term potential of Bangkok's hospitality industry.
Foreign Tourist Arrivals to Thailand Drop by 7% in First 8 Months of 2025
According to the latest report from the Ministry of Tourism and Sports, Thailand welcomed a total of 21,879,476 international tourists during the first eight months of 2025, from January 1 to August 31. This represents a 7.16% decline compared to the same period last year. The tourism sector generated revenue of 1,014,303 million baht from foreign visitors, a 5.4% decrease year-on-year.
The top 10 foreign tourist markets for Thailand in 2025 are as follows:
- China: 3,096,017 tourists
- Malaysia: 3,049,961 tourists
- India: 1,563,806 tourists
- Russia: 1,195,430 tourists
- South Korea: 1,036,361 tourists
- Japan: 712,158 tourists
- United Kingdom: 708,929 tourists
- United States: 692,212 tourists
- Taiwan: 672,067 tourists
- Laos: 630,051 tourists
