The Thai hospitality industry is questioning the effectiveness of new government tax incentives, emphasizing that labour shortages and operational challenges are more pressing concerns.
The Thai hospitality industry is grappling with a pressing issue: a chronic shortage of skilled workers. This concern has been highlighted in a recent survey conducted by the Thai Hotels Association (THA) and the Bank of Thailand, where 40% of respondents identified labour shortage as their primary challenge.
This revelation comes in the wake of the government’s new policy offering tax benefits to hoteliers in secondary provinces to boost tourism. However, the survey results indicate that these tax breaks have failed to enthuse hotel operators, with 50% of respondents expecting a mere 5% increase in income this year.
THA President Thienprasit Chaiyapatranun voiced the industry’s concerns, stating that the tax policy does not address the core issue of labour shortage. The survey also revealed that the majority of hotel revenue (70%) comes from tourists, while less than 20% stems from the MICE sector (meetings, incentives, conferences, and exhibitions), the segment the government is targeting in secondary provinces.
In light of these findings, hoteliers are calling for more impactful support measures. They are requesting subsidies for utility costs, a delay in the minimum wage hike, and reductions in land and building taxes, along with broader tax deductions from business expenses.
Addressing the labour shortage is a top priority for the industry. Mr. Thienprasit urged the government to establish a dedicated agency to source skilled workers and provide essential training, particularly in language skills, to existing staff.
Background: Thailand’s Tax Incentives and Tourism Push
The Thai government recently approved tax incentives to stimulate domestic tourism during the low season, from May 1 to November 30, 2024. These incentives include tax deductions for companies holding seminars and for individuals traveling to secondary tourism provinces.
The move is part of the government’s efforts to boost the economy, which has been lagging behind regional peers. Tourism, a significant contributor to Thailand’s GDP, is expected to play a vital role in the recovery.
However, the recent survey results suggest that the tax incentives may not be enough to revitalize the industry. The labour shortage remains a major obstacle, hindering the sector’s growth potential.
Conclusion
While the government’s tax incentives are a step in the right direction, the survey results underscore the urgent need to address the labour shortage in the Thai hospitality industry. A multi-pronged approach, including the establishment of a dedicated agency for sourcing and training skilled workers, coupled with additional support measures for hotel operators, could pave the way for a more sustainable and robust recovery for the sector.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
