By – Arpita Sondhi

Abstract

The luxury hospitality industry has long been celebrated for its blend of comfort, opulence, and first-rate services. However, it now confronts an ironic dilemma: how to sustain the quality of luxury while also addressing the urgent call for sustainability. This tension challenges the industry to meet the expectations for high-end services while minimising its ecological footprint. This article aims to explore this paradox within the context of Thailand’s first Climate Change Act, specifically how the upcoming legislation is expected to reshape and impact businesses in the sector.

Introduction 

The 21st century has not only pushed us individuals, but also various industries, to be more mindful of their engagement and interactions with the environment. This shift can also be seen in the preferences of consumers, thereby demanding conscious efforts from the producers to adopt greener practices. A few sectors, such as the luxury hospitality sector, face a unique challenge: how to ensure that a business model built on marketing itself as extravagant and luxurious adapts to incorporate environmental responsibility. They face the pressure of making their business models and processes more sustainable. Yet, while luxury and sustainability have long been viewed as mutually exclusive, nearly seventy-six percent of consumers claim they would stop purchasing from brands that harm the planet. 

The paradox of sustainable luxury refers to the apparent conflict between opposing values, i.e., indulgence and extravagance as opposed to responsibility and accountability. For luxury hotels and resorts, this paradox manifests in several ways. In the context of the tourism and luxury hospitality industry, sustainability is not only an essential consideration but also an effective tool for communication strategies. Finding this balance becomes particularly interesting in the case of Thailand, a global tourist hotspot where the economy is deeply tied to the hospitality and tourism industry. For instance, tourism receipts from foreign visitors had reached over 172 billion Thai Baht in December 2024. 

While Thailand doesn’t yet have a Climate Change Act, a draft has been developed by the Department of Climate and Environment under the Ministry of Natural Resources and Environment (MNRE) that is expected to be approved in 2025 and implemented in 2026. With the introduction of this draft, the intersection of sustainability and luxury in Thailand’s luxury hospitality sector demands exploration. 

Thailand’s Hospitality Industry – A Glance 

Thailand has been known for its pristine beaches, vibrant culture, and luxurious resorts. Major tourist hotspots include Bangkok, Phuket, Pattaya, among others. The projected size of Thailand’s hospitality industry stands at USD 22.68 billion as of 2025, with forecasts indicating growth up to 63.58 billion by 2030. In 2019, pre-COVID-19, Thailand hosted nearly 40 million tourists, making Bangkok the world’s most visited city. Furthermore, the Tourism Authority of Thailand has recently announced that luxury, wellness, sport, and romance attractions shall be developed in order to lure high-quality elite tourists. 

Clearly, the hospitality industry is one of the main drivers of the country’s economy, and it is crucial to recognise that it also plays a major role in higher energy consumption and rising greenhouse gas emissions. Tourism, especially the luxury hospitality sector in particular, finds itself relying heavily on energy-intensive infrastructure. A pre-pandemic study focusing on 4- and 5-star hotels in Pattaya states that the average emissions from the surveyed hotels amounted to 4,466.99 tCO2e per year, with electricity consumption being the most dominant contributor, accounting for nearly 77% of the total emissions. Furthermore, according to the same study, the greenhouse gas emissions from electricity were approximately 136,324.52 tCO2e (based on Thailand’s power generation emission factor of 0.57 kgCO2e per kWh). 

These findings further demonstrate that the hospitality sector is also a major contributor to carbon emissions and resource depletion. Thus, the upcoming revised Climate Change Act in Thailand is particularly relevant as a new compliance and regulatory framework. 

Bridging the Paradox in Thailand 

Fabrizio Zarcone, the World Bank Country Manager for Thailand, stated that “Thailand had set a clear goal of achieving net-zero emissions by 2065 and a 30 percent reduction in emissions by 2030”. The draft Climate Change Act aims to create an action plan for the country to reach these goals, and is said to be under review by nearly 30 governmental agencies and relevant stakeholders before being presented to the cabinet for approval. While it is currently undergoing legislative scrutiny, it is set to introduce key mechanisms for carbon regulation and promote sustainable development. 

Firstly, it shall empower state agencies to request mandatory greenhouse gas accounting, meaning that now hotels may be required to disclose their carbon footprint and greenhouse gas emissions mandatorily. Secondly, it hopes to introduce elaborate carbon pricing mechanisms, such as Emission Trading Systems (ETS) and carbon taxes. ETS essentially means that, depending upon the industry, emission caps will be set in alignment with national targets. These caps must be strictly adhered to. Carbon taxes, on the other hand, essentially account for the taxes that shall be imposed proportionally to the emission of greenhouse gases. The highest tax rate has been set at THB 120 per unit. Businesses may find some relaxation as the carbon tax they pay may be deducted from the costs of buying emission allowances under the ETS. Furthermore, revenues generated will be used to fund other climate policies. Considering the extremely high production of greenhouse gases from the luxury hotels in Pattaya alone, the imposition of these taxes would drastically raise the cost of the daily operations of the hotels. It could essentially push the luxury hospitality industry to adopt energy-efficient mechanisms and renewable energy sources. Furthermore, the bill aims to establish a Climate Fund that will support measures furthering the cause of climate action. This fund shall also extend loans and grants to business operators, representing a unique chance for the industry to adapt and seek aid to adapt to the national goals. 

Conclusion 

The paradox of sustainable luxury underscores one of the greatest and most relevant challenges of our time, i.e., balancing economic growth and consumer demand for indulgence and extravagance with the urgent need to protect the environment. Thailand’s tourism industry finds itself at a crossroad. For Thailand’s luxury hospitality industry, this draft bill not only proposes new compliance obligations but also presents a significant opportunity to redefine the concept of “luxury.” This draft presents ambitious targets and establishes a strong framework for a sustainable future. Although implementation presents several challenges, the long-term benefits are predicted to significantly outweigh the difficulties. 

About the Author:

Arpita Sondhi is a third-year law student at Jindal Global Law School, with a keen interest in entertainment, media, and corporate law. 

Image source: The Grand Palace, Bangkok, Thailand (Panya Baid, BBA LLB (Hons.) 2023, JGLS)