The Bhutanese Leading the way.
The Department of Tourism said Bhutan welcomed 25,003 guests between January and March 2024 which is compared to 12,696 arrivals in the same period last year.
While the numbers have doubled from 2023 this is still a far cry from the 2019 peak when Bhutan saw 53,124 tourists from January to March.
The sector that has suffered the most has been the hotel sector with their loan deferment coming to an end in June 2024.
Here, the Hotel and Restaurant Association of Bhutan (HRAB) Chairman, Jigme, said that since September 2022 when tourism reopened, there has been some growth but it has been very slow growth, and nowhere near the 2019 pre-COVID level, in terms of numbers, revenue and employment.
He said currently most hotels will not be able to start paying the loans after the deferment ends, and they will be meeting soon to decide on whether to ask for another deferment. Jigme said it will be a mutually beneficial proposal.
He said the HRAB is collecting data on the current hotel loan exposure. He said it was around Nu 50 billion during the time of the previous government and would have gone up by now.
Jigme said it is not that all hotels are not paying, as some hotels are paying by making use of the incentive.
HRAB may likely ask loan deferment for most given their condition and request incentives like interest reduction for those who want to pay.
Jigme said he has been part of the core committees on tourism and various recommendations were made to help hotels and tourism. One was making border towns a SDF free zone as business was going across the border, but he said failing that, the current 24 hours SDF free period could be extended to 48 hours, at least so they can be SDF free while coming and going.
He said he is encouraged by the doubling of the tourist arrival numbers, as it shows that the recovery of the sector will be much faster than anticipated.
On criticism that there are too many hotels and more are being built, Jigme said that it is a personal decision for people to invest their money, and in fact, many of the hotels coming up now had started in the pre-COVID times when things were good.
When asked about how hotels in the central and eastern Bhutan can be helped, he said the only way to help these hotels is to increase the duration of the stay, as people have to come back to Paro to fly out. He said there needs to be SDF waiver or discounts for longer stays, and the domestic flights need to be more reliable.
Jigme said that an international airport and the whole Gelephu Mindfulness City will also benefit the tourism industry due to the spill over effect.
He said the northern east-west highway has improved road connectivity, but there are still some incomplete stretches.
Another criticism these days of the hotels is they are selling their rooms very cheap, and are going as low as Nu 1,000 per night for tourists, especially the Indian tourists.
It is said this is a strategy being used by tour operators in India to cover the cost of the Nu 1,200 per day SDF, by pushing down the room rates in Bhutan.
Here, Jigme said that when it comes down to bringing down rates it has been true for most travel agents in Bhutan and outside. He said the hotel room rates are dictated by market forces, and when hotels are empty they rather give the rooms at reduced rates to bring in the guests.
He said once there are more tourists then the hotels will not push down the rates, and in fact, rates can go high.
He gave the example of the Paro Tsechu, when rooms were not easily available and so rates were also good.
Jigme said that hotels are benefiting from the liberalized policy after the reforms, as hotels can get tourists directly, but at the same time, they still prefer working with local tour operators, guides and drivers, as they are in one country under the same law.
When asked about the duration of the stay, the Etho Metho Tours and Treks CEO, Eutha Karchung, said after the SDF discount the duration is more or less the same as that of 2019.
When asked how numbers could be increased further, she said that the airfare could be looked at, as third country tourists have to pay USD 400 even for the Kathmandu-Paro circuit.
She said that another factor impacting numbers is that the USD 100 SDF is still USD 35 more than the old SDF, and that is having an impact.
She said a third factor is the frequent policy changes in the past, and so many foreign companies stopped promoting Bhutan, as a destination, and she said tours are planned out 6 months to a year in advance, and so currently Bhutan is still suffering from the past policy issues.
Eutha said another issue is that it is difficult to find people, as the tourism sector has lost a lot of people, and even the ones they get, do not plan to stay longer than 6 months to a year with them planning to head out.
The Association of Bhutanese Tour Operators (ABTO) ED, Sonam Dorji, said that a way to increase numbers is to given the old incentives that was there under the USD 65 SDF regime like duration discounts (50 percent after 9 nights and no SDF after 15 nights), tour leader discounts, etc.
The ABTO ED also said that tourism sector is picking up better than expected, and it gives hope to the sector, but there is still a long way to go.
Sonam said the tourism sector is hard hit with manpower issues, as many experienced employees have moved to Australia or the Middle East, and as a result there are new and untrained people everywhere. He said this is a huge issue, as the personal touch is lost and tourists will not get the same experience as before, and this needs to be fixed because tourism in Bhutan is impacted by word of mouth.
Giving an example, he said at one time Bhutan had around 4,000 guides, but there are now around 1,000 left, and while some keep getting business, others don’t and they too want to move on.
Sonam said there needs to be a coordinated marketing strategy so that everybody in the industry is on the same page and with one target. He said there should be provisions to help people during the off season, and so upskilling them is important.
The ED said there should be more tourism products, like river side tours where tourists, especially Indian tourists, can get their feet wet, and so there should be a provision made like that.
The ED said the USD 100 SDF has impacted the Asian market, as they are price sensitive and even a USD 35 increase is high for them. He said Bhutan used to get a lot more Chinese tourists along with Vietnamese and also Indonesians, which is now impacted.
He said Bhutan has also lost Maldivian and Bangladeshi tourists due to the USD 100 SDF applied on them.
