The Bhutanese Leading the way.
The Heads of the Association of Bhutanese Tour Operators (ABTO), Hotel and Restaurant Association of Bhutan (HRAB) and Guide Association of Bhutan (GAB), though all surprised with the transformation exercise in the tourism sector, welcomed the overall reforms. At the same time, they had suggestions to ensure it is a success by avoiding the potential pitfalls.
ABTO
Executive Director (ED) of ABTO, Sonam Dorji, said, “We are okay with the overall change, including increasing the SDF, and we are not opposing it, though we would have liked the SDF to have increased more gradually or introduced after a gap.”
ABTO ED said that now with the Tourism Levy Bill 2022 passed, the government must work to strengthen the local tour operators. He said the reason that the Nepalese tour operators can sell tour packages in Bhutan, etc., is because they can receive and send dollars to their counterparts via dollar accounts, a facility that Bhutanese tour operators do not have.
“If we have this foreign currency account facility then even we can sell tours to not only Bhutan but also the Nepal, India, Bhutan and Bangkok circuit,” said Sonam Dorji.
He pointed out to a danger under the new system, which should be avoided, that of the foreign tour operators turning the local tour operators into ground handlers or just commission agents.
Sonam said foreign tour operators have an advantage, as in their people trust them and can also hold them legally accountable there with supporting frameworks, like liability insurance and bankruptcy laws, etc.
The ED said that apart from TCB doing marketing, the government should leverage the local tour operators to do destination marketing to get tourists directly from the source. He said currently only eight percent of the deductible costs are allowed under marketing, which is too low to go abroad and do effective marketing.
The ED said while ABTO and other stakeholders were not consulted for the Bill, they should now be consulted when it comes to framing the rules and regulations, and also programs for the reforms.
He said these stakeholders would know better on every aspect of tourism, and also know better on where to place the roadside amenities, other facilities and services required.
He said tour operators will still be important to ensure quality tourism and accountability, as it is not assured that a tourist who can afford the USD 200 SDF will not misbehave or get into issues.
He said now there should be a lot of standardization and certification to improve the quality of stay and services.
Sonam said that to really add to the value experience of tourists, various regulations and restrictions in other areas have to now be relaxed. He said it is a problem if half the country is protected areas and there are restrictions on construction or tourism services, like wildlife or canopy walking. He said there are civil aviation restrictions against hot air balloons.
The ED said the government cannot make all the investments, and so it should facilitate private investments.
He said various rules and regulations should also be reformed and there should be accountability.
GAB
The Chairman of the Guide Association of Bhutan (GAB), Garab Dorji, said that while the reform caught them a bit off guard, but it is a good one.
“I was in favour of bringing such changes a long time ago from 2005 and 2006 itself, where I asked for the SDF to be raised,” said Garab.
He said that in the past due to undercutting and poor payment of guides, there were guides who were even getting only Nu 500 a day.
GAB wants a minimum fee of guides to be set at USD 50 a day in addition to proper accommodation and food or a separate and adequate allowance for it. He said once such requirements are put in place then automatically the quality of guides will improve, as the experienced and professional guides will be hired.
Garab said that around 1,000 guides are already getting a crash course training in the DeSuung. He said that GAB is also thinking of getting a few hundred guides for this course too.
He said the monitoring needs to be strong now, and there needs to be punishment. He said there are so called tourism standard hotels that have substandard rooms, which does not deserve a three- star rating.
He said he understands TCB has limited manpower, but this should improve. “There should be trekking guides, but it is not happening, and in my 36 years in the business, I have never heard of a hotel or restaurant getting penalized for substandard facilities or unqualified guides,” said Garab.
Garab said that only a very few guides have done well, in terms of being able to build a house and buy cars, but the vast majority live a hand-to-mouth existence.
He said GAB could get in touch with 3,111 guides out of the 5,600. He said operators and TCB can contact GAB for the list of guides and their qualification and experience.
He said in the past, an operator would charge a group around USD 100 to 150 a day for a guide, but a guide may only get half or less than that, which is not fair. He said operators can keep around 10 to 20 percent as a commission but not 50 percent.
He said that while most tour companies paid very low DSA rates to guides, they would manipulate higher amounts to avoid taxes. Garab said this should not happen.
HRAB
The Chairman of the Hotel and Restaurant Association of Bhutan (HRAB), Sonam Wangchuk, said that they, in principal, support the USD 200 SDF though they feel it should have come more gradually, and they also support the government 101 percent on the various other reforms requested by HRAB over many years.
He said the various reforms that will come in the rule, like direct booking, direct payment, and not keeping the hotels, which have the highest investment in the industry, at the mercy of one or two stakeholders is welcome and they thank the government for it.
On the SDF, he said they could have increased it to either USD 100 or even doubled it to USD 130, but brought it in after six months or a year so that hotels have time to prepare, and then slowly increase it.
Sonam said that the main concern now is that the earlier policy environment allowed the mushrooming of hotels in alarming numbers, to the point of a bubble, and now there are around 600 plus hotels in Bhutan, and many of them hold a total debt of Nu 48 billion in the banks. He said the government should now support the hotels on the subsidies, and the monetary side after the new law.
He said earlier in the time of regional tourism, there were tourists who matched the three star standards but were happy keeping regional tourists and so did not register, and now, they should be given a chance to register and upgrade.
He said it needs to be seen as what impact the Bill will have on the occupancy rates in the hotels, in the backdrop of concerns that occupancy will go down along with number of nights.
On the way forward, Sonam said that when people pay USD 200, they should be getting that experience, and it will not do if the clock tower in run down, if there is sewage bursting from pipes on the main road, if the Thimphu to Punakha route has a sole restroom at Dochula that is hardly used, etc.
He said around 70 to 80 percent of the hotels were heavily used as quarantine centers, and so hotels need time to do repairs and maintenance before opening up.
Sonam said now that the Bill is passed, quality has to be ensured as the guides should immediately undergo training, there should be Michelin chefs flown in to train local chefs, and investments should be made.
He said that around 2,000 Bhutanese youth are working in café and coffee shops in Kuwait and the Middle East, and maybe it is time to get them back and give them jobs here, as they would be experienced.
Sonam said said there should be proper standardization, and everything should be improved. He said if big hotels want to exit due to the change in the policy then there should be a proper way to do it.
He said that for the budget hotels, the hope is that either they upgrade or the regional and domestic tourists can help them to sustain.
