Tourist arrivals in eastern and southern Bhutan are dismal at the moment, and we need to work on changing that. But they have more to do with accessibility and less with the daily tariff. Lack of infrastructure like roads, hotels, amenities, and flights in these areas render them hard to get to. Once they are in place, it’s a no-brainer; more tourists are bound to go to these regions.

The argument that tourism benefits do not trickle down to the communities does not hold any water. It’s no secret that the whole country enjoys the benefit of tourism, be it from employment, taxes or the royalty. The US$ 65 royalty contribution has been largely ignored in this debate. Among others they help sustain free health care and free education systems, which everybody has access to. In fact, we need not look far back when the country’s dollar reserve (mostly tourism) literally rescued the country from a severe financial crisis resulting from an acute shortage of Indian Rupee reserve.

Just as it’s unreasonable to make every household take part in the production of hydro electric power and the mining industry in the country, it is absurd to expect everybody in the country to directly engage in tourism activities to benefit from it.

There’s no denying how removing the tariff would stir the economy and bring about more widespread benefits, but the problem is many of us forget to look past that. On the face of it, the benefits are a plenty and obvious. That’s where the good news end. They are deceiving and short-lived at best. But the bad and the ugly are elusive and are revealed only upon further probing.

Have the backers even considered how their delirious proposal would influence the microeconomic dynamics of the country? Increasing dependency on tourism as an economy will inevitably result in widespread impact across the country. The country would become very vulnerable and be exposed to greater risks. Given the volatile nature of tourism, all it’d take is something like political instability in the region, natural calamity, or travel warning to destabilize our economy. And while some of us will come out of it fine, there will be others who will suffer from it. Having abandoned their traditional trade, the villagers would take a direct hit with any drop in tourist arrival. Stakeholders like hoteliers and restaurants, after having made huge investments, would be largely affected. Even otherwise, if free market economics were to reign here, these groups would see diminishing returns in their investment as “yield per tourist” significantly drops. Consequently, we would see car rental fees go down; hotel tariff plummet; guide allowances drop, and so on and so forth.

Needless to say, that some 10% of the tour operators taking 30% of the market share is a result of an unfair advantage allowed by the current system is a myth. While some choose to remain small, others have been more aggressive or have been in the business longer.

It’s often been speculated that the large tour operators (TO) with vested interest (to hold on to their share of the market) that prevented the policy change back in 2010. It’s also been wrongly implied that only the large TO’s are vehemently opposed to any change in policy. On the contrary, it’s mostly the well-informed, medium and small TO’s who are apprehensive about the prospect of any shift in policy, despite the promise of short-term gains. The fact is, even as we speak, many large TO’s are patiently watching from the sidelines, prepared, knowing that they stand to benefit regardless. If the intention behind freeing the daily tariff is to encourage more competition and create a level playing field, it will have achieved just the opposite.

A healthy competition is a necessary ingredient of a sustainable economy. And it does exist under the current policy. In fact, barriers to entry are so low no other trade comes even close. It allows any citizen, with little or no capital investment, to register and conduct a tourism business free and fair. But as with any other venture, some do better than others. Tourists just don’t fall from the sky. Tour operators must work hard to convince them to see past the mandated daily tariff and get them to come to Bhutan. All tour operators ask is to give credit where it is due, as opposed to harassing them.

Undercutting in tourism is almost as old as the industry itself. It has been a problem and has no easy solution. Beating the daily tariff is no answer; it would be akin to endorsing the practice and playing party to those who engage in the act. Are we accepting defeat then? Other than the TO’s complaining among themselves, we have yet to hear legitimate complaints from tourists arising from the practice of undercutting.

If we are serious about curbing the practice of undercutting, we need to dig deeper; it arises from TCB’s inability to take action in absence of a legal instrument. Removing the daily tariff will not rid of the problem, but framing of tourism bill will. One suggestion would be to insert an advisory note somewhere on the TCB website that both TO’s and tourists are expected to honor and are subject to the government’s tariff policy, implying that anybody found violating the policy would be subject to deportation and prosecution. Again, this is where we need the tourism bill to enforce it.

And if value-for-money is what concerns us, then we need to increase the minimum daily tariff and not remove it. Bhutan’s tourism pricing mechanism is also transparent and widely available for all to see. Even still some people choose to come through foreign agents because of their prior affiliation with them, not so much because of lack of information. According to TCB’s urism Monitor 2014 Report, “around 71.44% of respondents agreed that ‘Bhutan represents good value for money.’”  It goes on to say that the data “clearly indicates that international visitors visiting Bhutan are highly satisfied with the value they receive in Bhutan.”

So the urgent call would be to frame the tourism bill first, including provisions to regulate regional tourism; then, if deemed necessary, look into optimizing the current tariff policy. We must exhaust all efforts before we consider eliminating the daily minimum tariff. Efforts should be made to improve road connectivity; facilitate marketing and product development; develop adequate tourist facilities; and streamline bureaucratic processes.

A thorough assessment of the country’s carrying capacity, using the limits of acceptable change framework, should precede any policy-change recommendation. It bodes well to remember that, as it is, with increasing tourist arrivals, people young and old are already beginning to show dependency on tourists at certain tourists’ sites. These changes are early warnings/indicators, which will gradually undermine the image of the country as a travel destination, eventually jeopardizing its sustainability. When the rest of the world looks at us with envy for upholding such bold tourism policy, do we really want to discredit it?

Suffice to say that lifting the daily minimum tariff is suicidal. It’s the delusion of short-term gains that have clouded the visions of many. Let’s not give in to the pressure of the few. Yes, I am a Bhutanese citizen first and then a tour operator. My hope is that we won’t allow our self-interest get the better of us when the nation’s larger interest is at stake. We all stand to win if liberalization could really guarantee sustainability of Bhutan as a tourist destination. But all my experience and logic say otherwise – that Bhutan as a country will suffer irreversible damage. That’s why I stand defiant. May we have the integrity, courage, and the wisdom to continue on the steps of our benevolent and far-sighted monarchs!

Contributed by 

Phuntsho Norbu

Tour Operator


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