Issues concerning SDF and change in tourist payment ecosystem reflected
Owners of 3-star hotels in Bhutan are submitting a three-point grievance to the government for review and intervention. The grievances, to be submitted to the office of the Prime Minister (PM), range from the Sustainable Development Fee (SDF), stringent regulations on 3-star hotels, to perceived loopholes in the entire ecosystem that have reportedly hindered the growth of hoteliers. Along with their grievances, the hoteliers have also suggested remedies that they believe the current government should take into consideration.
“Although the tourism and hospitality industry is seemingly picking up, we would like to submit that the 3 star hotels are still suffering with no signs of improvement. We believe that the following regulations and policies are the main impediments to our business,” their letter reads.
Owners of the 3-star hotels state that they primarily rely on regional tourists, most of who are from India. Tourists from India are typically families of 3 to 4 people who visit Bhutan to experience its culture and enjoy the mountains.
“However, the imposition of SDF of INR 1200 per person per day makes Bhutan unaffordable to the Indian tourists. Based on current SDF, a family of four has to pay SDF of INR 4800 per day. The cost is further aggravated by the need to have a licensed guide who charges another INR 3000 per day. The mandatory requirement to have an independent guide also requires them to book a larger car as the front seats are occupied by the driver and guide. In addition, they are required to pay entry fees at every monuments and temples which are also substantial,” the grievance reads.
According to hoteliers, a family of four is required to spend over Nu 20,300 per day. In addition, they also have to pay entry fee for visits to temples and monuments. This is not within the spending power of most regional tourist.
In their second grievance, hoteliers noted that the 3 star hotels have been built and certified to meet stringent standards imposed by the then Tourism Council of Bhutan (TCB) which required significant investments. The promoters have invested in their hotels with borrowings from banks to meet the 3 star certification standards on the idea that tourists are mandated to stay only in 3 stars and above rated hotels. However, the previous government removed this requirement and tourists can now stay in budget hotels. This has led to 3 star hotels competing with budget hotels which have led to degradation of the quality and standards that a 3 star hotel should be providing.
In their final point, hoteliers argue that a loophole in the entire eco-system is also being taken advantage of by agents across the border. “Although, hotels can now source tourists directly, we are unable to compete with the network of agents across the border as they are able to offer better deals in collusion with guides. Often payments are received in cash in BTN instead of INR and hand delivered through guides,” the letter reads.
“We are sure the current tourism policies and regulations in place are working well for the high-end hotels and luxury resorts as they cater to a niche segment of clients. For the 3 star hotels whose clients are cost conscious, the current policies and regulations are definitely not working in our favor,” it adds.
Although, the government has deferred the loan repayment to July 2025, most hoteliers say it is most unlikely that their financial situation will improve under the current scenario. “We wish to contribute to the economy and to the tourism sector by providing quality services that we envisioned and which the government expects of us. However, the overall policy and regulation is a serious deterrent to regional visitors whose spending capacity cannot be compared to those from other regions such as USA, UK, Europe and other high income countries.”
Taking all these deterrents into consideration, hoteliers say that they want the government to get involved and see for themselves the ground realities under which they are currently operating.
“We request the government to review and reconsider some of the policies, foremost among which is the SDF. We would also like to request the government to reinstate the mandatory requirement of tourists to stay in 3 stars and above rated hotels only.”
In addition, hoteliers share that developing a state-owned one window system for tourist hotels to book rooms would also improve the confidence of tourists and help remove middlemen and other agents that add to the cost of clients. “Such a system will enable direct communication between clients and hotels, and payments could also be received directly from the clients.”
Tashi Namgyal from Thimphu
