Thailand Joins the UK, Spain, Italy and Greece in Facing Tourism Dilemma: Why Rising Visitor Numbers Are Not Translating into Hotel Success, You Need to Know

Published on December 10, 2025

By: Paramita Sarkar

Tourism data from Thailand, the UK, Spain, Italy and Greece (European Union) reveals a significant paradox in global travel: despite rising international visitor numbers, hotel performance in many key destinations is facing notable challenges. The paradox lies in the disparity between overall tourist footfall and the performance of traditional hotels, as travelers increasingly turn to alternative accommodations, contributing to reduced occupancy and declining revenue in the hotel sector.

Thailand: A Struggle Between Record Domestic Tourism and Falling International Revenue

What’s Happening in Thailand?

Thailand, one of Southeast Asia’s most popular travel destinations, has seen a substantial influx of international visitors in 2025. Despite this, the country is experiencing difficulties in converting this increased tourism into higher hotel occupancy and revenue. As competition from regional neighbors like Japan and Vietnam intensifies, and travel patterns evolve, the country faces a paradox that tourism figures alone cannot explain.

Tourism Growth vs. Hotel Performance

According to the Ministry of Tourism and Sports, Thailand welcomed 19.29 million international visitors in the first seven months of 2025. While this represents a significant volume, it is a 6% decline compared to the same period in 2024. The drop reflects heightened competition in the region, as countries like Japan and Vietnam, with their attractive offerings and competitive prices, increasingly capture the attention of international tourists.

In contrast to the international slowdown, domestic tourism in Thailand is thriving. In the first half of 2025, 100.23 million domestic trips were made, marking a 2.49% increase from the previous year. This robust domestic travel keeps Thailand’s tourism industry buoyant, but the revenue generated from international visitors has declined. In fact, Thailand reported a 4.22% drop in international tourism receipts during the first seven months of 2025 compared to the same period in 2024.

What’s Behind the Paradox?

The primary challenge Thailand faces is the shift in traveler preferences. International tourists are either opting for cheaper accommodation or shifting to non-traditional hotels like guesthouses, hostels, and vacation rentals. Additionally, the intense competition from nearby countries with lower-cost travel options further pressures the hotel sector.

United Kingdom: The Battle Between Traditional Hotels and Short-Term Rentals

What’s Happening in the UK?

In the United Kingdom, the paradox centers around the surge in domestic tourism, alongside a rising preference for alternative accommodations like Airbnb and other peer-to-peer lodging services. These trends create significant competition for traditional hotels, which are seeing declining bookings and occupancy rates.

Domestic Tourism Surge and Its Impact

Domestic tourism in the UK has reached unprecedented levels, with over 105 million overnight visits within Great Britain in 2024. These figures are crucial for the UK’s tourism industry, as they contribute more to the economy than inbound international travel. However, the influx of domestic tourists is not benefiting traditional hotel accommodations in the same way it once did.

In fact, research from the UK Parliament reveals a surge in short-term lettings, with services like Airbnb growing rapidly in popularity. This shift is leaving hotels, which face higher operating costs and stricter regulations, at a disadvantage in comparison to the more affordable, flexible alternatives.

What’s Behind the Paradox?

The growth of short-term rentals has created a more competitive environment, with less regulation and lower overheads for those offering alternative accommodations. As a result, traditional hotels in the UK have struggled to maintain their share of the market, especially with the additional challenge of rising operational costs and taxes.

The European Union: Short-Term Rentals on the Rise

What’s Happening in the EU?

Across Europe, the rise of short-term rentals is also having a major impact on the traditional hotel industry. Countries like Spain, Italy, and Greece are seeing a sharp increase in the number of nights spent in short-stay accommodations offered via online booking platforms such as Airbnb, Booking.com, and Vrbo.

In Málaga, Spain, for instance, the city was identified as having the highest number of nights spent in short-stay rentals in 2023. Similarly, Croatia saw a record 24.6 million guest nights in short-stay accommodation during the third quarter of 2023. These trends indicate a broader shift away from traditional hotel stays toward more flexible, affordable lodging options.

What’s Behind the Paradox?

The increase in short-term rentals has led to a shift in European travelers’ expectations. These platforms offer more localized, personalized experiences at a lower cost than traditional hotels. In addition, the convenience and often more affordable prices of non-traditional stays make them appealing to younger travelers and budget-conscious tourists, making it harder for traditional hotels to compete.

What Do These Trends Mean for the Global Tourism Industry?

As Thailand, the United Kingdom, and the European Union grapple with this tourism paradox, several key takeaways emerge for the global tourism industry:

1. Rising Domestic Tourism: In all three regions, domestic tourism is experiencing a boom, indicating that local markets are helping to sustain the overall tourism numbers. However, this domestic surge doesn’t necessarily translate into hotel revenue growth, as travelers increasingly choose alternative accommodations.
2. The Rise of Non-Traditional Accommodation: The explosive growth of platforms like Airbnb and other peer-to-peer lodging services is reshaping the global accommodation landscape. With less regulation, lower overhead costs, and more flexible options, short-term rentals are significantly impacting the traditional hotel sector.
3. The Pressure on Traditional Hotels: Traditional hotels, especially in competitive markets like the UK and Thailand, are facing increasing challenges. High operating costs, increased competition from non-traditional accommodations, and changing travel patterns are forcing many hotels to rethink their business models.
4. Regulatory Responses: Governments and local authorities are beginning to address these shifts by introducing new regulations aimed at controlling the growth of short-term rentals. These include efforts to balance the housing market, regulate short-term lettings, and ensure that traditional hotels can remain competitive.

Conclusion: A New Era for Tourism

The tourism paradox in Thailand, the UK, and the European Union highlights the shifting dynamics of global travel. While international footfall is increasing, the traditional hotel industry is struggling to keep pace with changing traveler preferences and rising competition from alternative accommodations. As the industry continues to evolve, tourism authorities and hotel operators will need to adapt to these new trends, focusing on innovation, flexibility, and understanding the changing needs of today’s travelers.

The coming years will likely see more regulation in the short-term rental market, while hotels will need to enhance their offerings to attract and retain both domestic and international travelers.