Responding to queries on the alleged prevalence of rampant undercutting in the tourism industry the prime minister said, “undercutting is illegal”, during the meet the press session on December 27.
“While it is quite possible that undercutting maybe in practice, how rampant it is needs to be questioned because we really don’t know the extent of undercutting,” the prime minister said. “People talk about it but indeed we really don’t have any concrete evidence based complaints but if we receive any, the Tourism Council of Bhutan shall cancel his or her license and even if we receive any complaint without concrete evidence, we shall investigate.”
So far, only one case has come to the notice of TCB. TCB investigated and established that they were undercutting and as such their license was cancelled.
The prime minister said the government has put in place a very robust system to prevent undercutting which begins with tour operators being required to transfer the full amount of fund to the Tourism Council of Bhutan (TCB) before TCB issue the visas.
“We are monitoring and we hear of undercutting cases but we cannot allow undercutting because it is illegal and as against our policy of low volume high impact tourism,” the prime minister said. “Moreover, many tour operators in Bhutan charge higher than the minimum daily tariff and it is good because it not only generates revenue for the government but also generate better experience for the tourists when they are in Bhutan and also it is not in the interest of tour operators to undercut because they are forgoing their profits.”
He also said that there is need for peer-to-peer oversight in the tourism industry so that they can report on those who break the law.
An Association of Bhutanese Tour Operators (ABTO) official said, “In an open and competitive market, we cannot ignore the fact that there may be undercutting like any other industry. However, it is important for everyone to realize that tourism policy has always followed high value low impact policy and tour operators are operating within the same policy framework.”
An official of TCB said, “We have a transparent and robust visa application online system. Visa can only be endorsed and approved when the full government prescribed minimum daily package rate is deposited in the system. Even a cent short in tour payment deposit will not allow TCB to endorse the visa because the button to endorse visa will be disabled due to shortage of payment deposit”.
According to TCB the case of undercutting is brought to the notice of TCB through anonymous complaints.
“We would like to ask people who have evidence of undercutting to come forward to TCB. If there is proof of undercutting then we will investigate and take action according to the Tourism rules and Regulations 2017,” the official said.