Bangkok, Thailand — Thailand’s once-resilient hotel sector is grappling with renewed pricing pressure in 2025, reversing four years of consistent growth as a sharp fall in tourist arrivals from major Asian markets — particularly China — forces operators to slash room rates to protect occupancy and market share.
According to a new Industry Spotlight report by Tris Rating, total foreign arrivals this year are forecast to hit 33.1 million, down 5.6% from 2024’s 35.5 million. The slowdown stems from weaker demand in core source markets such as China, Malaysia, and South Korea. Official data from the Ministry of Tourism and Sports shows arrivals in the first eight months fell 7.2% year-on-year to 21.9 million, underscoring the sector’s growing challenges.
The drop in short-haul Asian visitors has been partially cushioned by surging demand from other regions. Arrivals from India — now a top-five source market — have increased significantly, supported by more than 15 cities offering direct flights to Bangkok and Phuket. Long-haul markets are also buoyant: visitors from the US rose 7.4% while European arrivals surged 15.6%, helping Thailand retain its position as a leading summer holiday destination for Europeans on Agoda for the second consecutive year.
However, analysts warn that external risks could complicate recovery. Tris cited the recent Thailand-Cambodia border tensions as a potential drag on both domestic and international tourism if they escalate further. Moreover, despite occupancy reaching a post-pandemic high in 2024, Tris expects the momentum to fade this year, with occupancy rates likely to remain flat or edge lower amid weaker foreign arrivals and more cautious consumer spending.
The weakening demand is already prompting a strategic shift. “The post-pandemic boom, driven by pent-up demand and strong domestic tourism, has reversed,” the report noted. “While room supply continues to grow, especially in Bangkok and the south, operators are increasingly resorting to discounting — particularly at high-end hotels — through unpublished promotions and targeted rate cuts during the low season.”
The steepest declines are coming from China, historically Thailand’s largest inbound market. Tris now projects Chinese arrivals will plunge to 4.6 million this year, down from 6.7 million in 2024 — a staggering 35% drop in the first seven months alone. Many Chinese travellers are shifting preferences: Japan has seen nearly 70% growth in Chinese arrivals, helped by a weaker yen and the appeal of shorter trips, while Vietnam has recorded a 78% surge. Analysts warn that if Chinese arrivals fail to rebound after October’s Golden Week, it could signal a permanent structural shift in outbound travel trends.
Financial performance is also under strain. Maybank Securities (Thailand) expects revenue per available room (RevPAR) across seven listed hotel operators to decline 3% year-on-year in Q3 — an improvement over the 5% contraction in Q2 — but warns that the metric will likely remain negative into Q4. The firm cited weak short-haul demand, a 7% year-on-year increase in hotel supply in Bangkok, and renovation disruptions as key headwinds.
As Thailand’s tourism sector navigates a turbulent landscape marked by changing travel patterns, geopolitical risks, and intensifying competition, hoteliers face mounting pressure to adapt. Whether the market can stabilize will depend on how quickly visitor flows — particularly from China — recover. Until then, strategic discounting and aggressive pricing tactics will remain central to survival in Southeast Asia’s most popular tourist destination.
