Bhutan believed that our tourism policy had to change. After much resistance, controversy and criticism, a change was made. Bhutan is marketed as a high-end tourist destination under the Bhutan “Believe” brand offering potentials, possibilities and the opportunities for a unique experience.

The immediate change felt was the revised sustainable development fee with the reasoning that tourism should be sustainable and that in the long term the change in policy, a part of the larger reforms in the country,  should be ploughed back not only into tourism, but also in social sectors, like education and health.

After the initial hiccup and the 50 percent reduction on the SDF, tourism is bouncing back. Tourist arrivals as of April have nearly doubled last quarter’s figures. Unfortunately, the old issues are back too. If the change was for high value and low volume, what is happening on the ground is quite the contrary. Judging by what those in the  industry say, we are as good as back to square one.

The belief in high value has taken a backstage, as we chase numbers. Undercutting,  the reason behind the high volume low value, is still determining who gets what or who brings in more. The repercussions are worse after the SDF revision. At a glance, the numbers are impressive. But the benefits are not trickling down or spreading, as the old trick in the business still determines arrivals, revenue and services provided. 

The revised SDF was not only to improve the government’s revenue from tourism. The mandatory fee paid straight to the government cannot be played around. It has resulted in improved revenue, but has not benefited the service sector.

In the name of competition and survival for some, Bhutan suddenly became cheaper. Those in the business are saying that they are selling tour packages as low as USD 50 or 80 per person per night excluding the SDF. Some operators will still make substantial profit from numbers or from advantages of other services they could provide. 

However, this unhealthy competition is affecting the hotel industry, most of which are dependent on the tour operators. The irony is that since the Covid-19 pandemic, the number of hotels has increased by about 54 percent. Many compromise with the belief that selling cheaper is better than remaining empty. 

The hotelier may make a small margin but it will impact how the cooks, the waiters, the driver and the housekeepers are paid after waiting for years for business to pick up. The aspiration was that with improved tourism business and a revised SDF, everyone in the industry would see improved benefits.

It is an irony that against the vision of making Bhutan an exclusive destination, we have fallen back to the same old track. This must change and it is not late.  Change again must begin from those in the industry. Outdoing each other by selling cheap, as they are experiencing, will not help anyone. Soon it will compromise services, arrivals and brand Bhutan.

The concerns of hoteliers and tour operators should be looked into. We need to investigate if there is fronting in tourism or if foreign tour operators are determining rates. We have to monitor hotels if it is easier to get a three-star certificate and function at a budget hotel level. Reintroducing the system of deducting taxes at source from tour operators could help curb undercutting.