New ministerial regulations allowing places of accommodation with no more than eight rooms and 30 guests to be excluded from the hotel business would lead to a 15-20% loss of tourism revenue and an increase in safety risks, according to the Thai Hotels Association (THA).
Udom Srimahachota, vice-president of THA's western chapter, said this regulation, which was recently published in the Royal Gazette, creates more disadvantages than benefits for the overall industry.
On Aug 30, the Interior Ministry revised the non-hotel definition from accommodation with four rooms and a maximum of 20 guests to cover properties with no more than eight rooms accommodating no more than 30 guests.
The Tourism Council of Thailand has proposed and supported this new regulation as it would boost local homestays that have unique services.
However, this idea clashed with the THA's standpoint, as the association thought it would exempt more properties from operating under the same rules as registered hotels.
Mr Udom said the government would lose revenue as those non-hotel properties could avoid tax collection, such as VAT, personal income tax and corporate income tax, from non-hotels.
"The problem is also with the land and building tax where hotels must pay 10 times more than non-hotels as those could pay this tax at the second household rate, unlike registered hotels," he said. "This is a loophole that some operators would employ to avoid hefty tax rates and would open more room for illegal nominees."
He said controversial cases had already arisen in Hua Hin and Cha-am. For instance, there are five plots of land owned by the same family, where each plot has eight rooms or pool villas that could operate as non-hotel businesses.
Their overall revenue would not be regarded as additional income at all with a total of 40 rooms, said Mr Udom.
Under this regulation, non-local investors can take advantage by using local villagers as nominees.
Mr Udom said homeowners might now easily rent out their place to illegal Chinese nominees who have more opportunities to attract Chinese guests than legal hotels.
"They could become hideouts for criminals, as they are not required to submit guest details to the immigration bureau in the way hotels are," he added.
Mr Udom said the association had urged the new interior minister to increase regulations for non-hotels to control safety and collect a proper tax rate from them.
As the ministerial regulations published in another Royal Gazette last week also endorsed other types of accommodation, such as tents or raft houses, he said the THA supported the move, but it still needed clearer requirements that ensure guest safety.
This would include requiring fire-proof canvases for tents, or limiting the capacity of raft houses.