Hotels are crying foul over the new land appraisal rules the Treasury Department is set to apply for the land and building tax from next year, saying the decision could deeply hurt the hospitality sector.
The department said this week the new land appraisal rules, which were postponed from last year, will be applied for calculating the land and building tax from Jan 1, 2023, resulting in an average increase of land prices by 8%.
Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association (THA), said the decision is unwise as the economy is struggling to recover, particularly the tourism sector, which still has an imbalanced cash flow because income from tourists cannot compensate for surging costs from inflation, high energy prices and higher interest payments to banks.
"This is absolutely not the right time," she said.
"Everybody might think the tourism industry is seeing a strong recovery from the full reopening, but the average occupancy in July is expected to tally 40%, a slight increase from 38% last month, as competition remains intense from heavy supply, forcing hotels to slash room rates."
Mrs Marisa said many hotels took out additional loans to sustain their businesses and were granted low interest rates or grace periods in the past two years. The hotels have started to pay normal interest rates this year as banks determine the tourism industry could benefit from reopening.
The decision about the new land appraisal rules came after proposals from the THA and Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) asking for a discount on the land tax this year were rebuffed.
Landlords and property owners will have to pay the full rate for the land tax this year, before seeing the rate increase further with the new land appraisal prices from next year.
Mrs Marisa said THA plans to submit a petition to the Finance Ministry again, urging authorities to consider postponing the new land appraisals for another two years until 2024. Both organisations also want land tax collection next year to take a gradual approach, increasing at a yearly rate of 25%, then 50% and then 75%.
She said recovery for hotel segments has been uneven, as large chain hotels outperformed small and medium-sized operators because guests are more likely to seek familiar brands.
Local guests prefer upscale branded hotels because they can enjoy privileges from the "We Travel Together" subsidy scheme, said Mrs Marisa.