A Reality Check for Bhutan’s High Value Tourism

The first ever two-day National Tourism Conference held this week brought together key tourism stakeholders, policymakers, non-government actors and private sector. ‘Taking tourism to the top’ was the slogan of the conference. It was an attractive, marketing slogan. No arguing about it.

The conference also saw an impressive turnout. Numerous issues and challenges confronting the tourism industry were discussed at length. If not anything else, this conference certainly provided the much-needed forum for public discourse on an important sector with huge value and potential.

Since 1974, when Bhutan opened its doors to international tourism, the industry has come a long way. Tourism sector’s contribution to government revenue has also significantly increased over the years.

In 2017, a total of 254,704 tourists visited Bhutan, recording 21.5% increase compared to the previous year. International arrivals alone grew by 13.8% while regional tourists arrival registered 25% growth. International tourism alone contributed Nu 79.8mn in revenue in 2017. And this does not include revenue generated from regional tourists.

In addition, tourism sector also provides employment opportunities to a large number of Bhutanese including those in auxiliary sectors like hotels and transport. The socio-economic benefit of ‘high value, low impact’ tourism has been crosscutting.

However, the tourism industry is plagued with numerous issues and challenges. While Bhutan continues to pursue high-value tourism, selling tour packages at high premiums set by the government, there are reports of unethical business practices such as rampant undercutting in the industry. At best, this might be a result of cutthroat competition.

The impact of undercutting may not be felt at the surface but it definitely results in lower revenue contribution. It also provides a false net value of tourism earnings. According to Bhutan Tourism Monitor 2017, tour operator’s total net was Nu 53.4mn. This means the entire tour operators earned this much in 2017. However, if undercutting is taken into account, the figures might be much lower.

The government and Tourism Council of Bhutan have patiently listened to the grievances of tour operators. But the issue of underselling tours is nothing new in the industry. It is a common practice. The question is will this government do something about it? Or will it also turn a deaf ear, just as previous governments?

That is not it. The tourism industry is currently confronted with the biggest dilemma of how to manage the increasing number of regional tourists. On one hand, regional tourists benefit hotels and restaurants. The flipside is, the surge in non-dollar paying tourists poses a threat to high-value tourism. Tourist attractions are already getting overcrowded. And Bhutan’s image as an exclusive, high premium destination is getting a serious beating. And if this trend continues, not long before, there may not any exclusivity to market to international tourists.

Despite the fact that tourism industry is almost 45 years today, infrastructure to promote tourism is still growing at a sluggish pace. Talk about basic infrastructures such as restrooms for tourists along the highways. Only in recent years a few restrooms have been constructed, but the fact remains it took 45 years to do that. Earnings from tourism are not ploughed back into developing the sector. Much can be done in this front as well.

A little consolation is that tourism development is one of the flagship programs in the 12th Plan. This might be an indication of genuine political interest to boost the tourism sector. But getting things done requires much more than saying it. Much more than a sexy slogan.