Hotel and restaurant sector contracts by a record low of -73.46% in 2020

HRAB has projected foregone revenue of Nu 2.85bn from January till April 2021

Tourist arrival in the country dropped by 91.12% on the back of COVID-19 resulting in the contraction of the hotel and restaurant sector in the economy, according to reports from the National Statistics Bureau (NSB).

The total number of tourist arrivals was projected at 2,849 for 21,918 nights.

The hotel and restaurant sector contracted by a record low of -73.46% in 2020 from a growth of 11.65% in 2019, down by 85.11 percentage points.

This has resulted in the contraction of the service sector by -10%. Broadly, the economy comprises primary, secondary and tertiary sectors. Tertiary or the service sector mainly comprises the service industry like tourism, hotels and recreational services.

The NSB categorizes hotel and restaurant as one of the sub-categories of the tertiary sector.

Tertiary sectors form over 46% of the GDP, of which tourism possesses the lion’s share of the contribution. As a result of the contraction of the hotel and restaurant sector, growth of the tertiary sector decelerated by more than 10% (-10.74 percent). This has directly impacted the overall GDP growth. In 2019, the tertiary sector grew by 9.75%.

While the sector directly impacted the GDP growth by -5.50 percentage points, hotel and restaurant alone contributed -1.40 percentage points on the overall GDP.

Since the closure of international borders in March 2019, the tourism sector which is the second highest revenue earner in the country that employs more than 50,000 people in the country affected more than 1,000 hotels in the country.

While this had the potential to further deteriorate the economy, His Majesty’s Kidu support proved beneficial in terms of sustaining the livelihood of the laid off employees. It has ensured money supply in the economy, according to a local economist.

Besides the impact on the GDP, the contraction in the hotel sector also has implications on the health of the domestic credit market.

According to the figures from the RMA, of the total outstanding domestic credit of Nu 158bn, over Nu 48bn are concentrated in the hotel and service sector. Here also the loan waiver has come to the rescue.

Should the pandemic situation prolong, the country’s largest contributor of the GDP, tertiary sector, which makes up half of the GDP, could slump further triggered by the downfall of the hotel and restaurant sector.

The Hotel and Restaurant Association of Bhutan (HRAB) has projected foregone revenue of Nu 2.85bn from January till April 2021. 

Chencho Dema from Thimphu