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October 14, 2016

Operating a Hotel Business: New Regulations on Using Certain Types of Building

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Bangkok Post, Corporate Counsellor Column

Thailand is one of the world’s most popular travel destinations. A vast amount of tourists visit the country every year. And almost all of them have at least one thing in common—they need somewhere to stay.

As tourists continue to pour into Thailand, savvy business operators have sought to capitalize on this wave of opportunity by providing various forms of accommodation. Small hotels and short-term accommodation rental service have become a particularly prevalent means to do business.

Many of these new hotels or short-term accommodation rental services, however, could be deemed illegal. Under the Hotel Act B.E. 2547 (2004), in general, providing temporary accommodation or short-term rent for less than one month is considered as carrying on a hotel business. And in order to do this, a hotel license is required.

To obtain a hotel license, the building which is to be used for the hotel business must meet certain requirements, and it must also comply with relevant building control regulations (e.g., that relate to fire alarm systems, safety measurements, efficient drainage and wastewater treatment systems, parking lots, access ways for cars, etc.).

These building control regulations are restrictive—many types of building, including row houses, row buildings, and apartments, do not comply with the regulations. Therefore, they do not qualify for use as a hotel building. And when business operators fail to obtain a hotel license because their building does not qualify, many continue on to illegally operate a hotel business, irrespective of the legal requirements.

If hotel operators are found by the authorities to be operating a hotel business without a license, they risk imprisonment for up to one year, or a fine of up to THB 20,000, or both, plus a daily fine of up to THB 10,000 during the non-compliance period, in accordance with the Hotel Act.

Aside from the regulations under the Hotel Act, there are additional controls under the Building Control Act B.E. 2522 (1979), which states that any person who uses any other type of non-qualifying building and attempts to pass it off as a type of qualifying building which is subject to such controls, including hotels, risks imprisonment for up to three months, or a fine of up to THB 60,000, or both.

Therefore, business operators who use other types of buildings to operate a hotel business, without the required hotel license, are in violation of both the Hotel Act and the Building Control Act, and they may be subject to penalties under both laws.

To rectify this issue, the Ministry of Interior recently issued a Ministerial Regulation Prescribing Descriptions of Other Types of Building Used for a Hotel Business Operation B.E. 2559 (2016) under the Building Control Act B.E. 2522 (1979), which came into effect on August 19, 2016. This Ministerial Regulation allows for certain types of building to be used as a hotel after they comply with specific safety requirements or measurements.

The Ministerial Regulation states that the use of other types of building which existed before August 19 can be changed to be as follows: (1) hotels providing only accommodation; and (2) hotels providing accommodation and a restaurant, or a place for serving food or cooking food. The application to change the use of a building must be filed within five years from the effective date of the Ministerial Regulation.

If alterations need to be carried out before the use of the building is changed, an application notifying the alterations must be filed within two years from the effective date of the Ministerial Regulation.

An additional requirement is that the total area of space in the building must not be less than 10 percent of any floor which has the largest area in the building.

The following requirements apply to a building which will be changed to be used as a hotel building:

  • The width of the walkway in the building must not be less than the width prescribed in the Ministerial Regulation, depending on the type of building;
  • The width and length of the ladder must be in accordance with the number prescribed by the Ministerial Regulation;
  • The loading weight in any part of the building must be in accordance with the Ministerial Regulation;
  • At least one standard fire extinguisher must be installed on each floor;
  • For a building which has three floors or more, the building’s pole, beam, joist, floor, ladder, roof, or wall must be made of fireproof material;
  • For a building which has four floors or more, the description of the fire escape or ladder must be in accordance with the Ministerial Regulation; and
  • The building boundary, vertical distance of the building, space between the building and other buildings, set back of the building, and car parking lots must comply with the building control regulations which are effective at the time of construction or alteration.

Based on these requirements, temporary accommodation or short-term rent business operators, who are using other non-qualifying types of buildings for their hotel business which are not permitted under existing laws, can now avoid heavy penalties by altering their buildings to comply with the new rules and regulations. They can also further legitimize their business by applying for a requisite hotel license.

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