Hotel operators are concerned about changes to foreign ownership rules for real estate because they believe it could lead to more illegal hotels in Thailand.

The government’s proposal aims to extend the leasehold period to 99 years for foreigners, while increasing the quota for foreign ownership of condominiums from 49% to 75% of usable space in a building.

These proposals would hit Thai hotels because they would encourage foreign home buyers to rent their units to tourists, said Udom Srimahachota of the Thai Hotels Association.

For instance, Chinese nominee agents might purchase an entire floor in a condo project and rent all the rooms out to only Chinese visitors in major tourism provinces, which has happened in the past.

He said Thai hotels face higher expenses than non-licensed rooms.

In Thailand there are about 16,000 registered hotels and roughly 15,000 unlicensed hotels.

In Hua Hin, a low-rise condo project was purchased in high volume by Russian agents, then rented out exclusively to Russian tourists, competing with local licensed hotels, said Mr Udom.