Home Business Tourism

Thai Hotels Gouging Guests to Collect Higher Room-Rate Subsidies

'We Travel Together' Tourism-Stimulus Program Creates Windfall for Cheating Hoteliers

A "small minority" of hotels in Hua HIn have raised rates to defraud the government out of subsidy funds, gouging customers in the process.

The Tourism and Sports Ministry is warning hotel operators against raising rates to grab more of the government subsidies available  under the recently launched “We Travel Together” campaign.

Minister Pipat Ratchakijprakarn vowed Monday that hotels gouging guests and defrauding the government of subsidies would be banned from future tourism-stimulus programs.

“We Travel Together” launched on July 15, offering Thai nationals up to 40 percent off 5 million room nights through October as a way to stimulate domestic tourism. Guests pay the discounted rate and the government pays the difference between that and the regular rate.

It’s long been a Thai maxim that when business is down, it’s time to raise prices. This time, however, there’s an extra incentive: Hotels that normally charge 1,000 baht per night – and would receive 400 baht from the government under the “We Travel Together” subsidy plan – are doubling rates to collect 800 baht.

Niphon Suwannawa, president of the Prachuap Khiri Khan’s Chamber of Commerce and Industry, said some hotels are even asking guests to help them defraud the government by refunding the customer half the subsidy.

Niphon, who also owns the Haad Thong Hotel, said only a small minority of hoteliers, but admitted it was happening in Hua Hin.

He blamed the ministry and Tourism Authority of Thailand for launching the 22.4-billion-baht subsidy program without thinking it through. Hotels should have been prohibited from raising rates in order to participate in the program, Niphon said.

Now that the horse has left the barn, the ministry is closing the door.

Pipat said any hotel caught price gouging to take advantage of the 40 percent subsidy will be removed from the campaign immediately and be banned from joining other future promotions.