The hotel industry’s future remains at stake: HRAB Chairman

The hotel industry’s future remains at stake: HRAB Chairman

The Chairman of the Hotels and Restaurant Association of Bhutan (HRAB), Sonam Wangchuk, talks to Business Bhutan reporter Dechen Dolkar about the state of hotels in Bhutan amid the Covid-19 pandemic and the challenges confronted by them.

Sonam Wangchuk is the proprietor of Tiger Nest Camp. He also served as the HRAB’s vice chairman for two years and as the chairman for three years earlier.

Q. Since it has been more than a year and half since the Covid-19 pandemic, what is the state of the hotels in the country?

A. We are very grateful to His Majesty The King for granting numerous kidu reliefs to the hotel industry from April 2020 till date. The industry would have been devastated without these relief support from His Majesty and would take longer to bounce back from the pandemic. Currently with no confirmed dates of opening tourism, the hotel industry’s future remains at stake and exposed to lots of financial liabilities to the banks. We are concerned and worried about how we will be able to fall back on track even after the opening of tourism as the numbers of tourist arrival into the country will be very less, according to the TCB’s official statement a few months back. Local budget and 3-star hotels are currently catering as quarantine facilities and some sustaining through government conferences. However, most of the hotels are completely shut down, which include all 5-star FDI hotels.

Q. Though the government is using some of the hotels for quarantine and the government is even providing some bridging loans, how are hotels in the country surviving?

A. We are indeed very much thankful to the government for using the hotels as quarantine facilities, although the prices are very minimal for quarantine facilities. However, something is better than nothing and this is helping the hotels to stay afloat. The bridging loan has now stopped and most of the hotels are not in a position to avail the services of the bridging loans, therefore our utmost request is to revisit and allow the availing of the bridging loan for the hotels.

Q. What are the issues that hotels in the country are presently facing?

 A. There are numerous issues faced by the hotels in the country.

Bad Debts- This is one of the biggest concerns and challenges for the hotel industry because of the way tourism structure works. In the current structure, hotels have to depend completely on travel agents for survival of the business whereby payments of availed services are delayed and some even turned into bad debts. While the industry has greatly been supported by travel agents in the success of the business, we have a few tour operators who have defaulted payments and have not paid hotels in huge amounts. Until and unless a policy intervention is not put in place, this issue will keep happening and hoteliers will have to face the consequences even in the times to come. However, we are grateful to the TCB who in a recent meeting with HRAB has confirmed that policy interventions will be done to facilitate solving this issue going forward. The details of the support are yet to be finalized.

 Direct Bookings- The hotel industry in the country today has boomed in terms of numbers compared to the last three to five years. Today there are about 600+ hotels in the country that are catering their services to regional and international tourists globally before the pandemic. Our current system mandates all tourist bookings of hotels to be routed through a travel agent. To this the hotel industry has submitted various submissions to the government to allow a change in  parallel structures to have hotels options of Direct Bookings with their clients/tourists from the regional and international market and not to just depend on TO’s. Globally the trend of tourism and hospitality is shifting to OTA (Online Travel Agents) like Trip Advisor, etc where guests choose their hotels of preference based on feedback and reviews given online. However, in Bhutan this is not possible due to the current setup of the structure. Therefore our request to the government is to also allow hotels to sell their rooms directly to guests/clients to maximize room revenue and as well work towards proper experience delivery rather than delivering services with negotiated rates with a third party. 

Q. What are the interventions that the hotels want from the government?

A. The hotels have lots of hope from the government, often we are considered secondary in the food chain of the tourism structure, whereas in reality we are the highest invested industry, the highest employment generator and one of the highest GDP contributors. Hotels are grateful to the government for their continuous support and we would like to further seek assistance from the government on the below in light of the pandemic situation.

Deferral of loan payment to 30 years – The service sector loan has not been included in the recent RMA notification of deferral of Housing, Commercial, Personal loans. Being the hardest hit industry by the pandemic the industry requests the government to kindly consider deferral of service loans to a minimum of 30 years which will help sustain the industry post the Covid-19.

 Interest Reduction- We would also like to request for reduction of interest rate of the service loans to at least 3-4% PA from what is being charged currently.

The above submissions are based on realistic surveys and the need of assistance in today’s time of the pandemic.