Incorporation
Can Hotel Management Companies Be 100% Foreign Owned in Thailand?
Thailand is one of the world’s top tourist destinations, making it a popular choice for international hotel chains. However, foreign ownership of businesses in the hotel sector is subject to restrictions under the Foreign Business Act (FBA). These restrictions mean foreign-owned hotels are not possible (with certain exceptions such as obtaining a BOI promotion or Foreign Business Licence).
While foreign ownership of hotels is restricted, foreign investors can start and operate a 100% foreign-owned hotel management company. A hotel management company is responsible for managing and operating the hotel on behalf of the owner. In practice, this is the approach used by international chains such as Marriott and Hilton to operate their hotels in Thailand.
Key points
- Foreign companies cannot directly own and operate hotels in Thailand without a BOI promotion or Foreign Business License, due to restrictions under the Foreign Business Act.
- International hotel chains can operate in Thailand by establishing a 100% foreign-owned hotel management company that manages properties through management contracts with Thai owners.
- Foreign investors can hold up to 49% ownership in a Thai hotel company, with investment protection ensured through shareholder agreements, though nominee shareholders are prohibited.
- BOI promotions for hotel ownership require significant investment: minimum 2 million baht per room for hotels with 100+ rooms, or 500 million baht total for smaller hotels, along with strict location and facility requirements.
Can a Hotel be 100% Foreign Owned in Thailand?
In Thailand, it is not possible to own a hotel as a foreign owned company unless a BOI promotion (only available for large scale projects) or a Foreign Business Licence has been obtained.
Foreign investors interested in the hotel industry in Thailand are subject to the restrictions of the Foreign Business Act (FBA) and land ownership laws.
Foreign Business Act Restrictions
Hotel operation (owning and running a hotel) is restricted under List Three of the Foreign Business Act (FBA). As a result, foreign owned companies cannot own and operate a hotel unless they obtain a Foreign Business License (FBL) or BOI promotion.
Read more:
Land Ownership for Foreign Investor
Under Thai law, foreign owned companies are prohibited from owning land outright. These restrictions are stated in the Land Code Act of 1954.
Therefore, foreign investors looking to develop or operate a hotel must explore alternative legal structures, such as:
Thai majority-owned companies
A foreign investor may hold up to 49% of shares in a Thai company that owns the land. Foreign investors can protect their investment through specially drafted shareholder agreements, articles of association and holding director positions. Using this kind of structure would mean the restrictions of the FBA would not apply as the company is not considered foreign. However, the Thai partners must not be nominees as Thailand forbids the use of nominee shareholders.
Read more: Benefits of Setting up a Limited Company in Thailand
Board of Investment (BOI) promotion
Under specific investment promotions, foreign investors may be eligible for land ownership in Thailand, subject to certain conditions. However, at present, the BOI only this privilege to large-scale hotel projects. We’ll explore these projects in more detail later in this article.
Read more:
Why a BOI Promotion in Thailand Can Help Your Business
Discover the Qualifying Business Activities for a BOI Promotion in Thailand
Foreign Business Licence (FBL)
A fully foreign owned company can apply for an FBL to operate a hotel, but approval is difficult to obtain. FBLs are granted case-by-case and usually only granted to high-end or specialized hotels.
Read more:
A common alternative, used by international hotel chains in Thailand, is to use a hotel management company. A hotel management company is where the Thai company owns the property or business entity while a licensed foreign hotel operator manages the hotel’s day-to-day operations under a management agreement. This allows foreign investors to benefit from the hotel business without directly violating ownership restrictions. Furthermore, hotel management companies can be 100% foreign owned.
What are Hotel Management Companies?
In Thailand it is common practice for hotel groups to own the land and the building under a Thai majority-owned company. However, the hotel management is operated by another company through a hotel management contract. The hotel management company can be 100% foreign owned, allowing the foreign hotel chain to operate the hotel to their standards and requirements.
A hotel management contract in Thailand is an agreement between a hotel owner and a hotel management company. Under this contract, the hotel management company is responsible for managing and operating the hotel on behalf of the owner. This includes managing the hotel’s day-to-day operations, such as hiring and training staff, marketing and sales, guest services, and maintenance
The hotel management contract typically outlines the specific terms and conditions of the agreement, such as the length of the contract, the fees paid to the management company, the performance standards that the management company is expected to meet, and the rights and responsibilities of both the hotel owner and the management company.
For example, if a foreign owned chain wants to enter Thailand, the structure would be as follows:
- The international chain does not own the hotel but signs a hotel management contract with a Thai hotel owner.
- The international chain provides brand standards, management expertise, and operations oversight under a management agreement.
- The hotel owner holds the hotel license and takes on the financial risks.
What is the Difference between Hotel Management vs. Hotel Operation
It’s important for foreign investors to be aware of the differences between hotel management services and hotel operation when considering foreign ownership in Thailand:
Hotel Management Services
- A hotel management company provides services such as branding, operational oversight, and expertise to hotel owners.
- The hotel owner retains ownership and holds the hotel license.
- Many international brands (e.g., Marriott, Hilton, Accor) operate under this model by entering hotel management agreements with Thai property owners.
- Hotel management is not restricted under the FBA, meaning a foreign company can set up a Thai Limited Company with 100% foreign ownership as long as it only offers management services and does not operate hotels directly.
Hotel Operation
- A hotel operating company owns a hotel and is responsible for both financial and business operations.
- A hotel license is required, and the operator assumes all legal and financial risks.
- Under the FBA, foreigners cannot fully own and operate a hotel unless they obtain a BOI promotion or an FBL.
Are there any BOI Promotions for Owning a Hotel?
The Board of Investment (BOI) offers a promotion for owning and operating a hotel under category 10.9.1, the “Activities to support tourism – Hotel”. In order to be eligible for a promotion under category 10.9.1 the project must be able to satisfy the following requirements:
Capital Requirements
Hotels with at least 100 rooms
A minimum investment per room (excluding land cost and working capital) must be at least 2 million baht.
Hotels with less than 100 rooms
A minimum investment (excluding land cost and work capital) must be at least 500 million baht.
For projects classified as small and medium enterprise (SMEs)
The hotel must have at least 20 rooms but not more than 99 rooms, a minimum investment per room (excluding cost of land and working capital) must be at least 1 million baht.
The use of loans can be used to split the investment into capital and a loan, however, the ratio for loans cannot exceed one third of the capital.
At least 1,000,000 THB of the required minimum investment must be made within the first three years after the issuance of the BOI promotion certificate in fixed assets. The minimum investment size of 1 million baht must be maintained throughout the promotion period.
Assets that are eligible to be considered as part of the investment include:
- Computers and electronic devices (tablets, phones),
- software licenses e.g. software to receiving bookings or CRM.,
- office rental for more than 3 years,
- construction costs or building rental fees (if the rental agreement exceeds three years),
- pre-operating expenses e.g. expenses incurred before operations commence such as the cost of registering the new company.
General Requirements and Conditions
The following will also be required to support an application for a promotion under category 10.9.1:
A copy or draft of Environmental Impact Assessment
An Environmental Impact Assessment (EIA) evaluates the current and potential effects the proposed project might have on the environment. This assessment will be a significant factor for the BOI when deciding whether to award a promotion to the applicant or not. For example, if the EIA shows that the project will have a serious environmental impact, then it is likely that the application will be rejected.
Business plans for the hotel
- A blueprint of the plan for the construction of the hotel and pictures of the hotel (artist impressions or architectural designs).
- A plan that outlines the service fees of the hotel, including details like the nightly rate and the price per room.
Room requirements
- Each room must have an area of no less than 29 square meters.
- The hotel must have recreational areas for example, meeting rooms and swimming pools.
Location of the hotel
The hotel must not be located within 100 meters of any of the following:
- government buildings,
- schools,
- temples, places for religious ceremonies,
- hospitals or healthcare facilities
The hotel must offer a suitable amount of parking spaces (i.e. a proportional number of spaces between the number of rooms and parking spaces). Furthermore, the entry and exit routes should not cause traffic issues.
Incentives available to eligible projects under category 10.9.1
The incentives available to projects awarded a promotion under category 10.9.1 are dependent on which province the project is located in.
Projects located in the following provinces are eligible for incentives and benefits under Group B:
Krabi, Bangkok, Kanchanaburi, Khon Kaen, Chachoengsao, Chon Buri, Chiang Mai, Nakhon Pathom, Nakhon Ratchasima, Nonthaburi, Pathum Thani, Prachuab Khiri Khan, Phra Nakhon Si Ayuthaya, Phang-nga, Phetchaburi, Phuket, Rayong, Songkla, Samut Prakan, Samut Sakhon, Saraburi and Surat Thani.
Projects located in the above provinces are eligible for the following Tax Incentives:
- Exemption of import duties on raw materials used in R&D
- Exemption of import duties on raw materials used in production for export
Please note, there is no Corporate Income Tax exemption available for a project awarded incentives under group B.
Projects located in the provinces not listed above are eligible for incentives and benefits under Group A4, which includes the following tax incentives:
- Corporate Income Tax Exemption of 3 years
- Exemption of import duties on machinery
- Exemption of import duties on raw materials used in R&D
- Exemption of import duties on raw materials used in production for export
General Business Operation Benefits
All projects awarded a promotion under 10.9.1 are eligible for the following general business benefits.
- 100% foreign ownership.
- Reduced requirements to obtain visas and work permits for skilled workers and experts.
- Ability to own land.
- Permit to take out or remit money abroad in foreign currency.
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Frequently asked questions
Can a hotel be 100% foreign-owned in Thailand?
No, foreign-owned companies cannot own hotels unless they obtain a BOI promotion or Foreign Business License (FBL). Most international hotel chains operate through management contracts with Thai hotel owners.
Can a hotel management company be 100% foreign-owned in Thailand?
Yes, hotel management companies can be fully foreign-owned. They manage hotels on behalf of Thai owners under management agreements, handling operations, branding, and staffing.
What are the ownership restrictions for foreign investors in the hotel industry?
Foreigners cannot own land or hotels directly under the Foreign Business Act. They can hold up to 49% in a Thai company or apply for a BOI promotion or FBL for full ownership in limited cases.
How can a foreigner legally operate a hotel in Thailand?
Foreign investors can operate hotels by partnering with Thai owners, using a Thai majority-owned company, or obtaining an FBL or BOI promotion. Hotel management companies provide an alternative without direct ownership.
What is the difference between hotel management and hotel operation?
Hotel management involves branding, staffing, and operations oversight while the owner retains the hotel license. Hotel operation includes full ownership, financial control, and legal responsibility. Foreigners can fully own management companies but not hotels.
What are the BOI requirements for hotel ownership?
BOI promotions require a minimum investment:
-
100+ rooms: 2 million THB per room
-
Under 100 rooms: 500 million THB total
-
SMEs (20-99 rooms): 1 million THB per room
BOI projects must meet environmental, construction, and location criteria.
What benefits do BOI-promoted hotels receive?
BOI incentives include:
-
100% foreign ownership
-
Land ownership rights
-
Easier visas/work permits for skilled workers
-
Tax benefits depending on location
What is an FBL, and how can a foreign hotel apply?
A Foreign Business License (FBL) allows 100% foreign ownership of a hotel but is rarely granted. Approval is case-by-case, usually for high-end or specialized hotels.
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