The Bhutanese Leading the way.
Hoteliers in the country are expressing growing concern over a significant drop in room rates for Three-Star hotels, citing oversupply and reduced tourist inflow as primary reasons behind the issue.
According to a hotelier in Thimphu, the rates for a night’s stay at Three-Star hotels, which were previously fixed under the Modified American Plan (MAP) at a minimum of Nu 4,000 to Nu 4,500 including breakfast and dinner, have now dropped to as low as Nu 2,000. The hotelier explained that this decline is due to an increasing number of hotels and fewer guests booking rooms.
A hotelier from Phuentsholing mentioned that hotel tariffs have been on a decline since they started their business three years ago.
“We set a promotional rate in the beginning and couldn’t raise it since. Guest inflow is low, and the number of hotels continues to grow. Many Three-Star hotels are coming up, and everyone is concerned,” the hotelier said. Travel agents reportedly encourage hoteliers to reduce their prices in exchange for bringing in more guests, resulting in further undercutting.
“The standard MAP plan is Nu 4,000 to Nu 4,950, but some hoteliers reduce their rates to Nu 2,500, which makes it difficult for us to maintain a profit margin after calculating all expenses at the end of the month,” the hotelier added.
In Punakha, another hotelier highlighted the influence of Indian travel agents, describing the situation as being dominated by these agents who negotiate for very low prices.
“Some hoteliers feel as if they are being bullied by Indian travel agents. These agents push for lower prices and end up disrupting the overall market rates,” the hotelier stated.
Hoteliers also pointed out that in addition to reduced rates, they are expected to provide free rooms to guides and drivers, further straining their finances.
One hotelier expressed hope that the government would consider reducing airfare and implementing a streamlined online booking system to eliminate the need for intermediary agents. According to the hoteliers, most Three-Star and lower-rated hotels are frequented by Indian tourists, whose agents drive down prices and contribute to the market challenges.
A hotelier in Phuentsholing also added that most of the travel agents keep their guests in Jaigaon, India and they send buses to pick them up and drop them directly to Thimphu and sometimes drop the guests back to Jaigaon at odd times in the night after directly travelling from Thimphu, which has also been a major factor in the reduction of occupancy rates in the region, and the hotels all running towards cheaper rates.
Hoteliers feel that the only solution to the issue is increasing the number of tourists to Bhutan using various policy approaches otherwise tour operators from Jaigaon will dictate the prices.
