Thailand’s hotel sector braces for impact of imminent wage hike

Most companies believe this wage increase will lead to a 15-20% rise in the cost of goods and services, posing a considerable challenge to hotels. 

This will be the third round of wage adjustments this year. The first round, implemented on January 1, raised the minimum wage to an average of 330-370 baht per day based on provinces. The second hike was implemented on April 13, in which the daily wage was raised to 400 baht in 4-star and above hotels in 10 tourist provinces. This rise applied to hotels that had at least 50 employees. 

On Tuesday, 76 chambers of commerce and 54 trade associations voiced their opposition to the proposed wage increase, citing concerns about potential adverse impact on businesses. 

According to the Labour Ministry, there are presently 461,000 people employed in Thailand’s hotel industry.

Preparing for a hit

The hotel industry is already bracing for the new hike in wages, with establishments in popular tourist destinations like Phuket and Hua Hin already having implemented the rise in April. 

Perajit “Peter” Binsomprasong, a seasoned restaurant manager with two decades of experience in the hospitality industry, explained that salaries in the hotel industry typically fall in the medium to high range. 

He explained that generally, the basic wage for hotel staff starts at 12,000 baht per month with a yearly increase. That added to their share of service charge, which usually averages about 12,000 baht per month, generally brings monthly salaries up to nearly 25,000 baht, well above the 14,315.37 baht average monthly income in Thailand. 

However, he said, raising the minimum wage to 400 baht will result in a 15% increase in hotels’ expenses, adding that with the wage increase, the cost of consumer goods will also rise. 

Perajit explained that hotels, especially smaller ones, would be forced to take cost-cutting steps, which may result in existing employees being overburdened with extra duties.

Ultimately, businesses will have to follow the government’s policy, but they may resort to cutting down on staff to save costs. One person may have to juggle several tasks. For instance, if they work as a line cook, they may also have to step in as maintenance staff when the time comes,” he said.

One of the government’s hopes was for businesses to help reskill and even upskill their employees, but Perajit pointed out that most hotel staff already put in 48 hours working six days a week, and even that is not enough to cover their normal duties. 

“Reskilling and upskilling are good options, but those require time and effort, which may be challenging when balancing working hours. Adjusting labour laws to reduce the working week from 48 to 40 hours may be a solution, but implementing such changes and acquiring new skills may be difficult when time is limited,” he said. 

The restauranteur, who currently manages Greyhound restaurants, said that while increasing wages may benefit staff in the short term, it would increase the cost of living and ultimately affect the industry. 

“Finding a balance between wage increases and cost of living is essential but challenging. In the long run, business owners may benefit, especially if the government intervenes to subsidise operational costs,” he said.

Impact on third-tier provinces

Thienprasit Chaiyapatranun, president of the Thai Hotels Association, acknowledged the hotel industry’s efforts to adapt to the wage hike, but expressed concern about the broader economic impact, especially on provinces with limited income and lower tourism demand. 

He also expressed worries about staff being laid off or quitting due to an increase in duties. 

“The daily minimum wage will be raised and we believe, the prices of basic necessities will follow suit. Plus, hotels will be hit with additional expenses, such as rising electricity and higher daily expenses, yet they cannot offset these by raising their room rates,” he said. 

Thienprasit added that he understood that the government wants to improve living conditions, but this is the first time that the minimum wage will be implemented nationwide at the same time. 

“Shouldn’t there be calculations beforehand? Third-tier provinces with limited income and lower tourism demand will suffer, as expenses will rise without an increase in income,” he warned.