The cabinet on Tuesday gave the go-ahead for unlicensed hotels to join the We Travel Together tourism stimulus campaign and for expanded subsidies on services or goods bought by travellers during four working days (Monday-Thursday).
The move is to increase supply and give tourists more choices, said Prime Minister Prayut Chan-o-cha.
Under the cabinet's decision, hotels that are not registered as required by the Hotel Act will be permitted to join the We Travel Together scheme, Gen Prayut said. The government will loosen restrictions on three groups: hotels in the process of obtaining a licence, hotels whose licences expired less than a year ago, and small or boutique hotels that do not fit the hotel licence criteria.
According to data from the Tourism Authority of Thailand, 6,000 registered hotels joined the scheme. The number of hotels in Thailand is much larger, with at least 800,000 rooms operating legally and 1 million illegally.
Gen Prayut threatened on Tuesday to blacklist hotels that cash in on the state tourism stimulus scheme to unfairly raise their room rates.
"I've already ordered hotels joining the programme to be penalised if they have been found to increase their room rates to take advantage of the 40% subsidy from the government," he said. "The Tourism and Sports Ministry is investigating this issue."
The prime minister's warning came after several registrants complained of inflated room rates on social media.
Gen Prayut also called on travellers to visit second-tier provinces and travel more during working days.
The prime minister recently instructed the Tourism and Sports Ministry and the Tourism Authority of Thailand to distribute tourism revenue to the vast majority of the country.
Of the approved budget totalling 18 billion baht for the hotel subsidy and 2 billion baht for air tickets, the Tourism and Sports Ministry expects just half to be used, as people tend to drive to destinations near Bangkok rather than use air transport.
Chamnan Srisawat, president of the Thai Federation of Provincial Tourist Associations, said that as everyone in the tourism industry is being affected by the ongoing outbreak, the decision to extend eligibility for the We Travel Together scheme to hotels that lack licences will help such hotels stay afloat.
If the government allows more hotels to participate, local tourists will have more choices in price and location to accommodate their budget, such as lodging at a homestay in a local community, he said.
But Mr Chamnan said the increase in daily subsidies for the purchase of services and goods during trips, from 600 baht to 900 baht during the four working days, is not the right way to stimulate tourism in the first place.
The government should consider using the budget to support tour operators directly, especially transport operators like tour buses and airlines that help funnel tourism income throughout the country, he said.
In addition, representatives from tourism associations have to be included in the process and work more closely with state agencies to enable the government to release more inclusive tourism measures in the future, Mr Chamnan said.