Their loan deferment ends in 7 months from now and believes they can never repay it unless the government intervenes
With business running on an all time low, 3-star hoteliers in the country are concerned about their loan repayment which is due June next year after the banks provided multiple deferments after the covid pandemic.
On ground realities, a 3- star hotel has loans not less than Nu 50 million (M) with some hotels even as high as Nu 200M. For those with Nu 50M, the loan amounts to approximately Nu 0.5M plus interest every month to be liquidated in 10 years. However, hoteliers said they barely earn even Nu 0.3M a month and that is enough just to retain the existing staff and meeting daily sustenance.
The hoteliers shares that although the number of tourist visitors in the country is increasing annually, most of their tourist packages cater primarily to regional tourists from India, unlike 5 star hotels. However, these regional tourist arrivals have also declined drastically because of the Sustainable Development Fee (SDF) of INR 1,200 per tourist per day.
The hoteliers reported that the occupancy rate for their hotels is only about 19% in 2023, and estimated occupancy rate this year is just about 10%, while the actual occupancy needed to cover expenses should be at least 50%.
Tandin, an owner of a three-star hotel in the capital, said, “With the due time for loan repayment just a few months away, I am very concerned about how I will be able to pay the loan if we three-star hoteliers don’t come up with better ideas to sustain ourselves.”
Tandin shared that if the government could reconsider the SDF for regional tourists visiting the country, more regional tourists would be likely to visit, benefiting both the hotels and the government.
Another hotelier, Phuntsho, said, “As most of us are aware of the limited number of guests in the hotels, we are facing challenges in meeting the needs of our hotels, let alone repaying the loans to the bank.”
Phuntsho shared that it is a certainty her three-star hotel will be auctioned by the bank, as she has been unable to pay the accrued interest, and her hotel currently faces a deferred loan. “I even received a call from the bank stating that if I am unable to pay the loan this time, my hotel will be auctioned,” said Phuntsho.
In addition, Phuntsho shared that the loan deferment was helpful, but it is only a short-term measure. In the long run, they are the most affected, as they will have to continue paying the interest to the bank, equated monthly installment (EMI), among others, which could potentially last until her children’s time. “I am really concerned about how I will be able to pay the loan since the loan moratorium ends in June next year,” said Phuntsho.
Tshering, another hotelier in Simtokha in the capital said, “The three-star hoteliers are kind of in crisis, and if we are unable to pay the loan when the loan moratorium ends in June next year, we could face a financial crisis in the country.”
Hoteliers like Tshering is concerned as any other hotel owners as many three-star hotels could fall into Non-Performing Loan (NPL) status or worse where the three-star hotel owners could end up in prison, as they genuinely will not be able to repay the loans.
Tshering suggested that the only way forward could be to make the SDF for regional tourists a one-time entry fee or a one-time visa fee. “If the government could consider making it a one-time entry fee, then we would have little hope since most regional guests tell us that the SDF is very expensive in our country, even though they want to visit Bhutan,” said Tshering.
Meanwhile, sources say that the central bank wants financial institutions (FIs) to decide whether to extend the loan moratorium after June next year, meaning that the FIs can evaluate their clients and decide accordingly.
For now, the 3 star hoteliers have decided to seek necessary interventions regarding their concerns from the relevant government agencies.
Sherab Dorji from Thimphu
