At present, the hotel industry in Bhutan is facing many challenges, of which rapid decline in the average occupancy rate is the major concern which has placed the entire hotel industry at risk. This has been caused by the drastic increase in the number of hotels in recent years.
To make the situation even worse, there are residential properties like bungalows and apartments accommodating tourists which are being rented as homestays, guest house, and serviced apartments. Most of these accommodations are listed on online travel booking sites called Airbnb.
This kind of business has become rampant in the country, particularly in Thimphu and Paro where there are so many hotels and where hotels are struggling with low occupancy.
This issue is of huge concern for the hotel industry as this has added to a sharp decline in the average occupancy rate.
According to the Hotel and Restaurant Association of Bhutan (HRAB), “Residential properties accommodating tourists advertising on Airbnb should not be legalized because it is against the country’s guiding tourism principle of high value and low impact. Airbnb’s business concept promotes cheap tourism, the kind that Bhutan does not endorse in principle.”
HRAB’s Executive Director Sangeeta Rana said, “Legalizing such business will have a negative impact on the country because this would not only result into housing crunch but it will also lead to increase in the unemployment rate as this type of business offers lower rates due to their low operational cost. A tourism product with low standards is also against our tourism policy of high value”.
She said, “Hotel industry is a high investment business with high operational costs. Hotels are licensed and taxpaying entities in Bhutan functioning under certain standards and guidelines which are constantly monitored by different government agencies. The hotel industry is one of the few industries in the country which is currently employing a large number of youths and it can hire more if the conditions of hotels are improved.”
“In contrast to the hotels, the legal status of such business is questionable because most of them are not licensed and TCB does not allow such private entities to accommodate tourists. The basic standards of safety and hygiene are also questionable as tourists staying in such properties are fed food cooked by the property owner. But most importantly, this type of business is against our tourism policy, high-value low impact tourism”, she said.
HRAB filed a complaint to Tourism Council of Bhutan (TCB), outcome of which was that the TCB during the stakeholder meeting on 15th April decided that it will issue a notification in public media stating that TCB will not allow such business practices and if anyone is found operating, they shall be punished according to the law.TCB will also start inspection and monitoring after it issues the notification.
Director General of TCB, Dorji Dhradul said, “The number of hotels in Thimphu, Paro, and Punakha has increased drastically and with Airbnb, there are so many rented apartments accommodating tourists without a license and we do not know what kinds of services are provided to the visitors”.
He said, “Any business that is being operated without a license is illegal and TCB will not allow such business. However, such accommodations like a certified guest house and homestays are allowed to function in remote parts of the country where there is no hotel or where construction of hotels are not viable. The government usually encourages such accommodation in remote places to not only accommodate tourists but also to earn extra income”.
“Since we are pursuing high value or exclusive policy for tourism, any tourist that comes to Bhutan should feel that not only the environment but all the services that we are offering are special too. So we will not allow any illegal business practices which are against our tourism policy”, he added.