The Bhutanese Leading the way.
With so far average tourism numbers in January and February 2025 comparable to 2024 and Nu 13.508 billion (bn) in deferred hotel loans coming to an end by June 2025, there is now a growing sense of urgency within the government on increasing the numbers.
The main mantra, till date, to increase numbers has been marketing which has been done aggressively but the results are not showing in the numbers.
The government has made it clear that the SDF will not be touched or changed.
Now, the only hope for any possible revival, in numbers, is giving a duration discount, group discount and other incentives.
The Ministry of Industry Commerce and Employment (MoICE) has a proposal on this front, which has been given to the two-month old Bhutan Innovation Lab office under the Prime Minister’s Office (PMO).
In the earlier system, after the 9th night, tourists got a 50% SDF discount, and after the 15th night it was a 100% SDF discount. This encouraged longer stays by tourists.
However, MoICE does not want to just bring back the old duration discounts, but do it more scientifically, and if necessary, even give it for shorter number of nights.
Data from the Bhutan Tourism Monitor shows that the average length of stay is falling. In 2018 it was around 7 nights for international tourists and 5 nights for Indian tourists. In 2024 this fell to around 5 nights for foreign tourists and 4 nights for Indian tourists.
An official said if the average duration of stay is around 4 nights, then it would make more sense to give a 50% duration discount from the third night, itself, and a 100% discount from the 7th night.
The official said the aim of the duration discounts is to try and push visitors beyond the current golden triangle of Paro, Thimphu and Punakha.
The concern is that there are not enough good hotels in far flung areas, like the east or the south and so the MoICE proposal is also to offer incentives to build hotels there with tax incentives and fiscal incentives. However, the incentives will be evidenced based, like it should lead to more job creation, revenue, etc.
The hotels in these less visited areas could also get access to finance to build hotels, as currently there is a moratorium on hotel loans.
The official said that Thimphu, Paro and Punakha have excess hotels but there are hardly any in the other areas.
In the older system, there was a group discount which meant that if there is a pac of 10 tourists then one of them or the tour leader would get a 50% discount on SDF by the old TCB, airfare by Druk Air and even hotels.
If someone brought a pac of 15 tourists then one of them would get a 100% discount on everything and enjoy everything free.
The MoICE proposal is also looking at group discounts, but it wants to just have one category of group discounts.
An ABTO member said that the association has submitted a request for a duration discount from 2022, itself, but it is still under discussion.
The Innovation Lab is currently looking at a different issue and will be able to only get to the tourism issue after finishing with that. This will mean that there will be no discounts in the spring season.
On 29th January 2024, the Prime Minister issued two directives to MoICE on tourism which had to do with increasing tourist arrivals and promotion of tourism in border towns in the south.
In 2024 Tourism industry stakeholders had earlier said that while they do not want to change the USD 100 SDF, they wanted the earlier duration and group discounts that were additional incentives under the old MDPR policy.
An official said MoICE was on the verge of introducing duration discounts, but it was decided that Bhutan Innovation Lab should take a look at it once in a detailed, scientific and impartial manner.
