The Bhutanese Leading the way.
The Bhutan Chamber of Commerce and Industry (BCCI) is drafting a proposal to liberalize the tourism tariff structure. The final report is expected to be submitted by BCCI to the cabinet by next month.
A senior BCCI official said that the ‘Thai Offer’ of discounted tariff rates made to tourists from Thailand last year had a major impact in increasing tourist numbers especially during the lean months of winter and monsoon.
He said the beneficiaries apart from tour operators were airlines, hotels, guides, restaurants, handicraft shops, taxis and shops.
However, he pointed out that the entire tourism policy had been decided by just around 600 tour operators who only represent one sector of the tourism industry in Bhutan. It was some tour operators who questioned the ‘Thai Offer’ saying it would devalue Bhutan’s tourism brand.
The official said the proposed liberalized tariff structure of BCCI had to take into account the general benefit of all sectors and not just for tour operators.
According to the proposal the government would get its USD 65 per day tariff and all tourists would still have to be packaged only through licensed tour operators.
The proposed change, however, is to do away with the mandatory USD 250 cap that tourists pay during the peak seasons.
“Though some tour operators talk about high value the reality is that given cross cutting and commission schemes, many tourists coming to Bhutan are for as low as USD 150 to USD 100 a day though they officially put it as USD 250,” said the BCCI official.
The government as part of its Eastern Development Initiative is already studying plans to completely liberalize the tourism tariff for the six eastern Dzongkhags of Lhuentse, Mongar, Trashigang, Trashiyangtse, Pemagatshel and Samdrup Jongkhar to promote tourism there. The only condition would be paying the USD 65 tariff and coming through a tour operator.
The Chairman of the Guides Association of Bhutan (GAB) Garab Dorji said, “We would still want tourists to be routed through tour operators but there is a need to review the liberalization of tourism tariff to bring in more tourists and also promote tourism in the east.” He said more tourists would mean that even guides would benefit.
He said that bulk of the benefit of tourism in Bhutan went to the tour operators and it was again they who mainly controlled the tourism policy. He said the guides were currently not benefitting much.
A senior official of the Hotels and Restaurants Association of Bhutan (HRAB) said that though they had not discussed about the full liberalization of tariff the hotels were very happy with the results of the ‘Thai Offer’. The official said that they would welcome changes in the tourism tariff especially in the offseason months of winter and monsoon when hotel occupancy rates are very low.
The BCCI official said that the airlines were also receptive for liberalizing the tariff as it would mean that they could carry more tourists. Currently both Druk Air and Bhutan Airlines have been largely running at a loss due to unfilled seats especially in the non season months.
According to BCCI the idea with a liberalized tariff policy is that even the tourists would benefit as currently with the rigid tariff structure tourists have very little choice in where they could say, how they could travel and what they could eat.
“Tourists pay USD 250 but they are sold to Bhutan for USD 150 by international agents and then they end up getting poor accommodation and food which affects tourism,” said the BCCI official.
With the liberalized tariff tourists could stay in the hotels of their choice, take the vehicles they want, eat the food they want to eat, ask for additional guides and be free to spend additional money in shops and handicraft outlets.
“The problem with the current tariff structure is tourists spend very little outside it as they feel they have to get back their money’s worth from the tour operator,” said the official.
The first idea to liberalize Bhutan’s tourism policy came from McKinsey in 2010 when it suggested the idea to the former government to increase the number of dollar paying tourists. The former government instead increased the peak season tariff from USD 200 to USD 250 after a show of hands at a meeting of mainly vocal tour operators.
The BCCI official said that the BCCI was drafting the proposal keeping in mind that it did not represent just tour operators but also has to look at the interests of guides, hotels, airlines, shops, restaurants, taxi drivers, handicraft shops and the economy in general.
BCCI said their proposal would also look at increasing return visits by creating more tourism packages in different districts, encourage bed and breakfast especially in rural areas etc.
BCCI said that on the other side it did not want the country to also be flooded with low budget regional tourists and so the brand would be maintained through royalty paying tourists, standardized hotels and charging for entry to places like Dzongs and other popular tourist spots.
However, the same BCCI official said that government needs to take a strong decision on liberalizing tariff rates.
“The government has so far said that the tourism policy changes should come from tour operators but that is the safe way out as tour operators who comprise only one part of the tourism industry will always say no,” said the BCCI official.
The Prime Minister in his state of the nation report has announced that the tourism sector will adopt rules and regulations to create an enabling environment.
The Association of Bhutanese Tour Operators (ABTO) is predictably not too enthused about any tariff liberalization policy as most tour operators traditionally want to maintain the fixed tariff rates.
ABTO Executive Director Sonam Dorji said that ABTO had not yet been consulted by BCCI. “BCCI should consult and discuss with all stakeholders and particularly with ABTO being one of the oldest associations,” said Sonam.
He said that ABTO had no idea about any BCCI proposal yet but it was working on its own proposals which are looking at the issue in a holistic manner. He said that at the moment though he could not take any stand on the BCCI proposal as he had not seen it yet. He said the current tourism policy of Bhutan has worked for the last 41 years and over the years both the numbers of tourists and revenue has been going up.
He said that there are around 600 tour operators and most of them are members of ABTO.
An ABTO member said, “Why try and fix something when it is working.” He said that there was no point looking at only tariff as numbers can go up if other more important issues like airline capacity, marketing, diversifying tourism products, transport infrastructure, accessibility etc are addressed. He pointed out that historically whenever the airline capacity increased tourism numbers went up.
The member also pointed out that huge numbers of tourists would have huge impacts that Bhutan is currently unprepared for. He said that even the capital city Thimphu’s sewerage lines burst out when there is some rainfall or on other occasions.
Meanwhile the Tourism Council of Bhutan (TCB) has come in for some criticism from tour operators.
In 2012 the TCB submitted a Tourism Policy to the Gross National Happiness Commission (GNHC) but it was sent back from GNHC saying that it was not fit enough to be called a policy. From then on there has been relative silence on the policy.
An ABTO member said that since the TCB itself had failed to take a lead everyone from BCCI to now even the National Council wants to get involved.
The National Council will be reviewing the Tourism Policy and sector in the upcoming winter session of Parliament.
Meanwhile TCB spokesperson Damcho Rinzin said Bhutan already has a tourism policy it has been using all these years which is guided by principle “High value, Low Impact”. He said that as far as written document is concerned, tourism is covered under the approved Economic Development Policy 2010.
He said, “Upon the directives of the Tourism Council of Bhutan we are working on the policy document which will be submitted to GNHC soon.”
