Room rates surged during the recent tourism high season, sparking criticism among some travellers who viewed Thai hotels as being more expensive than those in neighbouring countries.
Now mired in the low season, fewer arrivals has some hoteliers fearing the competition could trigger a price war in certain areas.
Rising challenger
Thienprasit Chaiyapatranun, president of Thai Hotels Association (THA), said the average room rate of Thai hotels in March 2025 rose by 8% year-on-year to US$157, based on industrial data gathered by HotStats, a profit and loss benchmarking company.
Mr Thienprasit said when compared with emerging destinations such as Vietnam, which attracted more Chinese tourists than Thailand for the first time in the first quarter this year, the average rate for Thai hotels was higher. The average room rate of hotels in Vietnam was $129 in March 2025, an increase of 4% year-on-year.
He said an influx of tourist demand this year drove the average occupancy rate in Thailand up to 72% in March 2025 from 69% year-on-year.
For the period, Vietnam's occupancy rate rose to 60% from 55% year-on-year.
In the luxury segment, Thai hotels recorded a 69% occupancy rate in 2024, compared with a 61% occupancy rate in Vietnam.
According to Lighthouse, a commercial platform for the travel industry, Thailand ranked second in Southeast Asia in terms of average room rates during the high season last year.
However, the country dropped to third place during the low season (May to September), with prices hovering around $100 in each of those months, behind Singapore and Indonesia.
The average room rate in Vietnam fell during last year's high season.
Mr Thienprasit said the criticism over pricey room rates should subside as the average price during the low season has continued to drop.
He said the greater concern as tourist numbers decline is the potential for price wars, which may be triggered again.
Pricey Phuket
Suksit Suvunditkul, president of the southern chapter of THA, said the average room rates of hotels in Phuket rose during the high season.
The average room rate for five-star hotels on the island was 10,000 baht, while that of four-star properties was 6,000-7,000 baht.
For the luxury segment, mainly consisting of private pool villas, the average rate was 25,000-30,000 baht a night.
"It's true that we set more expensive prices," he said.
"After five-star and luxury hotels led the way in raising their rates above pre-pandemic levels in the 2023-2024 high season, four-star hotels took the opportunity to follow suit in the recently concluded high season."
During this low season, rates are dropping to 5,000-6,000 baht for five-star hotels, 2,500-3,000 baht for four-star accommodation, and 15,000 baht for luxury resorts, said Mr Suksit.
He said the rate upgrades were necessary for hotel operators in Phuket as operational costs had been surging for years, largely driven by labour and electricity costs, while room rates remained static for many years.
Phuket pays the highest daily minimum wage, with rates increasing from 354 baht to 370 baht last year and to 400 baht this year, said Mr Suksit.
An increase in the provincial minimum wage is typically attributed to an overall rise in labour costs at all levels, according to the tripartite wage committee.
Learning your lesson
He said most hotels in Phuket have learned that price wars, which used to be a common practice among Thai hotels, were not healthy for the province in several ways.
Phuket has a very limited capacity, said Mr Suksit. Based on the existing infrastructure, it can accommodate up to 14 million foreign tourists a year, the same as in 2019.
Tourist numbers surged to 13 million last year, intensifying pressure on the environment and decreasing people's quality of life, with severe traffic congestion, he said.
The island can no longer rely on tourist volume alone, especially as the Chinese market continues to decline, said Mr Suksit.
In the first quarter this year, the number of Chinese arrivals was 196,880, less than half the total of Russian arrivals, which reached 429,254.
China is expected to drop out of the top three source markets in April, as the Indian and UK markets already surpassed it as of April 21.
"While the Russian market might appear significant for the island, the combined total of other markets exceed it," he said.
"Local hoteliers have adapted by targeting a diverse mix of guests, rather than relying too heavily on any single market or sheer volume."
In March 2025, hotels in Phuket recorded an average occupancy rate of 76%, down from 82% year-on-year, as operators avoided discounting prices to compete for guests.
Eventually hoteliers were able to improve the average daily rate by 10 percentage points in the first quarter, said Mr Suksit.
