Knight Frank Chartered (Thailand) Co Ltd

From Recovery to Stabilisation: Thailand’s Hotel Market in 2025 Faces Revenue and Competitive Challenges

Knight Frank Thailand reports that Thailand’s tourism and hotel markets entered a phase of normalisation in 2025, with demand stabilising below pre-pandemic peak levels amid continued supply expansion and shifting traveller behaviour.

In 2025, Thailand welcomed 32.97 million international visitors, representing a 7.2% year-on-year decline and approximately 83% of pre-pandemic peak levels. The year was characterised by a continued rebalancing of source markets, with Malaysia emerging as the largest inbound market, while arrivals from China declined sharply. In contrast, India and Russia remained key growth markets, partially offsetting weakness across several short-haul Asian markets.

Bangkok: Stabilising Demand, Rising Supply Pressures Performance

Total arrivals to Bangkok in 2025 reached approximately 89% of historical peak levels, with domestic and international demand converging at similar recovery ratios. Domestic tourism continued to play a critical role in supporting hotel demand, particularly during off-peak periods. However, hotels with a stronger reliance on international travellers remained constrained by the incomplete recovery of inbound demand.

Bangkok’s hotel performance moderated during the year, with average occupancy declining to 75.7%, while Average Daily Rate (ADR) fell by 1.4% year-on-year, reflecting limited pricing power in an increasingly competitive environment. Performance pressures were compounded by new supply, as 14 hotels opened in 2025, adding more than 3,200 rooms to the market.

Phuket: Resilient Market with Growing Competitive Intensity

Phuket’s tourism sector continued to demonstrate resilience, supported by its leisure-oriented positioning. International airport arrivals increased by 2.2% year-on-year in 2025, while the hotel market remained largely rate-led. Average occupancy declined to 76.2%, although ADR growth helped partially offset pressure on RevPAR.

Despite this resilience, competitive intensity increased as new supply continued to enter the market. In 2025, eight new hotels opened in Phuket, adding over 1,300 rooms, with further supply scheduled for completion in 2026, particularly in the upper-upscale and luxury segments.

2026 Outlook: Disciplined Growth and Focus on Revenue Quality

Looking ahead, Knight Frank expects Thailand’s hotel market in 2026 to be characterised by disciplined growth, heightened competition, and a greater emphasis on revenue quality rather than volume-led expansion. While international arrivals are expected to improve gradually, demand growth is likely to remain incremental, as shorter lengths of stay and increased price sensitivity continue to limit upside potential.

Carlos Martinez, Director, Research & Consultancy at Knight Frank Thailand, commented:

“Thailand’s tourism and hotel markets entered a phase of normalisation in 2025, with demand stabilising below prior peak levels amid continued supply growth and shifting traveller behaviour. While domestic travel provided an important demand buffer, softer international arrivals and limited pricing power placed pressure on hotel performance, particularly outside peak periods.
Looking ahead, 2026 is expected to be characterised by disciplined growth, increased competition, and greater emphasis on revenue quality and operational efficiency.”