Photo Courtesy: Keys to Bhutan

Pay commission recommends SDF on regional tourists but hoteliers not happy with it

According to the Fourth Pay Commission Report, 2019, to ensure that the proposed salary revision does not undermine the long-term fiscal sustainability and economic stability of the country, and in keeping with the relevant provisions of the Constitution, Pay Commission recommends introduction of Sustainable Development Fee (SDF) of Nu 500 on regional tourists.

The report said that in view of the increasing number of regional tourist arrivals, there is the opportunity to introduce SDF on regional tourists. During the year 2018, about 170,000 regional tourists visited Bhutan. The introduction of SDF of Nu.500 per head is estimated to generate Nu.425 million annually.

The Government may also look into the possibility of enhancing the USD 65 SDF that has remained unchanged for the last 40 years or more, report states.

Tourism Council of Bhutan (TCB) said that TCB sees introduction of SDF on regional tourists and enhancing SDF on international tourists as an opportunity to provide exclusive services and experiences to our visitors which we are lacking at present.

According to the Tourism Monitor of Bhutan 2018, most tourists said that they are happy with the services offered by the country but there are also tourists who complained about waste issue and food quality and varieties.

Director General of TCB, Dorji Dradhul said, “The report on pay commission says one of the sources for extra fund to meet the pay rise is increasing the SDF which is USD 75 per tourists per day and charging regional tourists Nu 500 per person per day”.

He said, “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 other services that we offer are special too”.

He also said, “If we want to improve their experience, we need to spend more and we need to get more from them. A minimum of 250 USD per person is not sufficient and there is a case to enhance SDF if we are to go by this policy”.

“For regional tourists, at least a minimum charge should be imposed on them because at present since they are not paying any fee, we cannot guarantee any service to them. 250 paying tourists have all the services and regional tourists have to do everything on their own”, he added.

The Hotel and Restaurant Association of Bhutan shared that if SDF for regional tourists is being introduced, Budget hotels will be affected the most which will bring down the occupancy rate making it almost impossible for budget hotels to sustain.

Sonam Dorji, one of the HRAB board members representing all the budget hotels said, “According to the Tourism Monitor Report, 75 per cent of the regional tourists travel through travel agents and stays in star rated hotels. Other 25 per cent of the regional tourists who comes by themselves stay in budget hotels”.

Sonam Dorji said, “I feel it is good to charge onetime fee for regional tourists as there should be some form of regulation. In fact budget HRAB even proposed to the former government that at least Nu 300 should be imposed for regional tourists as entry fee but regional tourists were already paying monument fees so it was not possible. Government could either impose monument fee or one time entry fee”.

He said, “One of the reasons why regional tourists are charged monument fee is because we want to manage the crowd. But if the fee is Nu 500 per head, a family of four visiting Bhutan will have to pay a minimum of Nu 2000 per day. If they are visiting for 5 days, they are paying Nu 10,000 as SDF to the government. Those tourist who have the capacity to pay Nu 500 per day as the SDF will stay in star hotels and those who are not able to pay might not come to Bhutan  because they will have to spend extra money for food, accommodation and transportation among others”.

He also said, “This will have direct implication on budget hotels and because if tourists pay SDF, they will have to come through travel agent and when they come through travel agent then there is no picture of budget hotel getting direct booking from the tourists. The current practice of tourists coming and staying in any hotels with their limited budget will disappear and everything would become like dollar paying tourists where everything will be dictated by travel agent”.

“We might not be able to support the view that Nu 500 should be imposed but we feel that there should be some form of regulation. The introduction of booking confirmation for hotels and monument fees has already reduced the number of regional visitors. Today we are operating with 20 to 30 per cent occupancy but introduction of SDF would further reduce our occupancy”, he said.

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