The Prime Minister (PM), Dasho Tshering Tobgay has encouraged 3 star hotels to channel their energy and resources into marketing after a two hour deliberation with hotel owners on Thursday.
While acknowledging that the Sustainable Development Fee (SDF) cannot be done away or trimmed, Lyonchhoen told hoteliers that there are so many other areas hoteliers can work upon to attract tourists into the country.
Owner of Ugyen Hotel in Thimphu, Ugyen Dorji said that the PM has directed all hoteliers to concentrate more on marketing strategies. “Lyonchhoen assured us that wherever and whatever marketing we do, the government will assist with obtaining Visas and aid financially as well,” he said.
About the hotel owners’ grievance on further deferment of loan after it expires in June 2025, the PM said that the government will communicate with Royal Monetary Authority (RMA) and other financial institutions, and come up with a solution soon.
“We were told not to worry and that there are still many months for our loans to be liquidated,” another hotel owner, Tshering Wangdi said. “We are happy to have consulted the PM who has assured us full support.”
Informing that the Economic Stimulus Programme (ESP) loans at 4% interest rates for hotels are also being assessed currently, Lyonchhoen directed the hoteliers and tour companies to immediately report any incidence of guides being misguided in their line of duty. He said that such practices should not be overlooked and will have to be extinguished before gaining foothold.
Additionally, the PM also shared that the government will soon issue an executive order mandating all guests to be lodged in 3 star hotels only. For this, renovation and refurbishing of 1 & 2 star hotels into 3 stars will also be made compulsory.
The meeting happened after 3 star hotel owners in Bhutan submitted a three-point grievance to the government for review and intervention. The grievances ranged from the SDF, stringent rules on 3 star hotels, and loopholes in the entire ecosystem that gravely hindered hoteliers from growing. Along with their grievances, the hoteliers also suggested remedies which they feel that the current government should take cognizance of.
“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 grievance read.
The 3 star hotels pleaded they mainly survive on regional tourists, the bulk of which is from India. Tourists from India are usually families of 3 to 4 pax who come to Bhutan to enjoy Bhutanese culture and mountains.
However, the imposition of SDF of INR 1200 per person per day makes Bhutan unaffordable to the Indian tourists.
In their second grievance, hoteliers noted that the 3 star hotels have been built and certified to meet stringent standards imposed by the erstwhile 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 star 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 lamented 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,” they shared.
“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 stated.
Although, the government has deferred the loan repayment to July 2025, most hoteliers said 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 review, hoteliers said they want the government to involve and see for themselves the ground realities upon which they are currently functioning.
In addition, hoteliers shared 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.”
Meanwhile, the Ministry of Industry, Commerce, and Employment will review the concerns raised and take appropriate measures to address them.
The meeting was also attended by the Minister, Secretary, and senior officials from the Ministry of Industry, Commerce, and Employment.
Tashi Namgyal from Thimphu
