On May 10, news surfaced about a recent court ruling making Airbnb illegal in Thailand. A court in Hua Hin fined two hosts at the Wan Vayla Condominium between B13,000-15,000 in a case that has set a precedent against the American room letting application.

For Bangkok's over-two-thousand Airbnb hosts, this came as a dramatic shock. Operating in more than 65,000 cities, 191 countries and offering a total of 3 million-plus accomodation rentals, Airbnb has taken the world by storm—Thailand included. In 2015, Bangkok’s Banglamphu district ranked the second-highest-growing neighborhood in the world in terms of its popularity on the site, and since then, the number of apartments, condos and villas that are available to rent in Bangkok has flourished. In 2017, the Din Daeng/Huai Khwang district ranked 11th most-trending neighborhood in the world with 218-percent growth in one year. According to the Bangkok Post, Thai Airbnb hosts have served more than 1.2 million guests in the past 12 months, earning between them four billion baht in supplemental income from Feb 2017-Feb 2018.

But the Thai Government and the Thai Hotels Association (THA) see the site’s business model as a disruption to Thailand’s hotel and tourism industry. According to media reports, a letter from the local authorities has been sent to the Wan Vayla Condo in Khao Tao outlining the court’s decision in two of three cases where condos were rented out for less than one-month periods. The court ruled that renting out rooms via Airbnb on a daily or weekly basis is an illegal act if the renting party has not obtained a licence to run a hotel business under the 2004 Hotel Act.

“The Hua Hin ruling has made it clear that short-term renting on a daily or weekly basis to tourists is illegal,” says Chris Potranandana, a partner at the law firm Strathmore Litigation and Asset Management. “To make it legal, the hosts need to have a Hotel License.”

"The ruling doesn’t scare me at all. It's usual for Thailand to freak out whenever somebody doesn't understand the importance of innovation and healthy business competition."

However, Chris believes the ruling will have little real-world impact on Airbnb operators in Thailand. “To be frank, most of the Airbnb hosts in Thailand will continue to rent out their rooms anyway because the penalty isn’t that severe—there is no prison sentence,” he says. “If caught, they just have to pay the fine, and to be honest, the fines aren’t that high.”

So what penalty can hosts potentially expect? In the first Hua Hin case, the court ruled on Jan 5, 2018 that the host must pay a B5,000 fine plus an additional B500 for each day of a 20-day stay, resulting in a total B15,000 fine. The second case ruled on Jan 16 for a B5,000 fine in addition to B100 per day for 81 days’ worth of stays. The total came to B13,000. A third case is still pending.

Chris, however, doesn’t feel that hosts need worry too much about the courts coming after them—though he does warn that the new ruling could set a precedent for successful conviction that didn’t exist before. “It really depends how serious the Thai government is towards this issue,” he explains. “Since there are already two cases of fines imposed from the Hua Hin court, other provinces in Thailand can follow in the courts' footsteps and use it as an example for future punishments. Due to this news, other condominium or apartment owners may report or sue his or her neighboring host if they are opposed to the idea of having their condo being rented out on Airbnb or are unhappy about the coming and going of Airbnb tenants.”

Among the Airbnb hosts we spoke to, we found both confidence and concern. “The ruling doesn’t scare me at all,” said one host who rents out her 42-sq-meter Phahon Yothin condo for B1,500/night. “It's usual for Thailand to freak out whenever somebody doesn't understand the importance of innovation and healthy business competition.  I'm sure they have plenty of other things to worry about than just going after one of many other small hosts.”

However, another person we spoke to was less confident. “I will definitely stop Airbnb-ing just to keep my record clean. I’m turning to find a long-term tenant instead," they said.

Another Airbnb host, who owns a three-bedroom house in Thonglor and rents it out for B4,600/night, said they didn’t need to worry because they rented a house, not a condo. “I’m renting out an entire home, not a single room,” she said. “I’m the owner of the property and I’m not doing anything to cause trouble to society or anyone around me. But if there’s an actual law enforced, then I’m happy to abide by the law.”

“The Airbnb business model is not illegal. It’s the people who use it—renting out their places short-term—that’s making it illegal."

Chris supports this argument, pointing to a clause in the Hotel Act that exempts small residential properties. “Any residential premises that are open for rent with no more than four rooms and with a total service capacity of 20 guests is exempt from the Hotel Act,” he says.

The ground, however, is more murky for those renting in condos. To obtain a hotel license, they must prove they employ a qualified hotel manager, that they comply with the Building Control Act, have a Building Permit and Use Certificate which states that the existing building can be used as a hotel. “The Hotel Act is very unsupportive to hotel businesses and Airbnb’s business model,” says Chris.

“The Airbnb business model is not illegal,” says Chris. “It’s the people who use it—renting out their places short-term—that’s making it illegal. Do these hosts know that what they’re doing is illegal? Probably. But as long as they don’t get caught, they’ll continue to rent out their rooms on Airbnb.”