Bhutan better off with the current daily tourist tariff Part II

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

9 replies
  1. bhutjolokia
    bhutjolokia says:

    $250/day for hotel, 3meals, guide, transport, luggage service, entrance fee, tea breaks enroute, free green herbs available in the winter-
    month oct./nov., festivals, arrow-shooting, cultural program, home visit & much more adventure is by far not too much. it should be higher & people would still come. what makes a trip to bhutan expensive, are the flights & the 5 star hotels in…
    india. during their stay in bhutan, tourists spend minimum extra & beer/liquor is everywhere cheap.
    no reason to loose the golden goose eggs.

  2. aphento
    aphento says:

    If I understand correctly, the previous string of comments sounds rather selfish. What the original article is saying is that the national interest should come BEFORE self-interest of the stakeholders (which includes tourists like yourself). If you don’t know yet, the push for change is coming mostly from the international high-end hotel chains in the country, which also seem selfish.

    To be practical, as much as you would like Bhutan to welcome everybody in the world, it simply is too small. Bhutan must remain vigilant and take care of itself. It cannot afford to target every category of tourists. Bhutan’s fragile culture is already being challenged and threatened. You don’t want to make it even harder for them.

    Once Bhutan gets trampled, who do you expect to pick them up? Will you be there to rescue Bhutan then? I don’t think so. I bet you will watch from a distance with a sigh and say, “I feel so sorry for Bhutan. It is no more the same and not worth the trouble anymore, but I am so glad I was Bhutan when it was still unique and charming.” And that’s not fair!

    If people feel that Bhutan is not worth the tariff, they can choose not to go there. But if they feel that it is worth paying the tariff, then they would go. But why do people want to go to Bhutan in the first place? If it is not worth paying the tariff, it must not be as valuable then. In which case, why go to Bhutan anyway??

    For the sake of argument, here’s a scenario: If you cannot afford a Mercedes Benz , will you blame Mercedes or Daimler AG? or will you settle for another car that’s more affordable and worth your money? Now, if you really see the worth in Mercedes and want to get one, you will do anything to get one and feel good about it. On the other hand, just because everybody wants a Mercedes, you cannot expect the company to bring the price down. The company must ensure that their brand image and quality are preserved so that future consumers can appreciate and value the car just as much and enjoy the same. Its competitive edge depends on its ability to adapt and differentiate itself from the rest of the automobile companies. It’s a win-win for everybody.

    If you are a mindful world traveller, you will understand what Bhutan is up against and appreciate their struggle, and therefore their policy. While enjoying it yourself, you want to save it for future tourists (who can appreciate the destination) as well. For that matter, as a traveller, you don’t want to rush and destroy any tourist destination that’s worth going to. It’s certainly a fine balancing act.

    And it’s not always about business and money, as you put it. It’s more about Bhutan’s sovereignty. There is lot more you don’t understand about Bhutan’s geo-political situation. India is by far the most important development partner for Bhutan and the Bhutanese can travel freely in India. It’s sort of a reciprocity rule. Just as most of Europe has Schengen visa policy, any region or country can have their own rules and policies based on trade ties, treaties, and ground realities. Is there any point in arguing that member countries of the Schengen area are getting preferential treatment when they travel in the area??? Nope!

    But Bhutan does recognize the impact from increasing number of regional tourists, so it’s reached a point where some measures need to be taken. But making them pay the daily tariff will never be one of them.

    Bhutan should align its tourism policy in a way that it can still remain enjoyable for all future “mindful” travellers in the world. Let us all be part of the solution and not add to the problem.

    Thank you!

      MIGNIEN says:

      PART ONE
      I apologize again sir Phuntsho Norbu for his excellent exposure .
      I thank you , Apentho , for participating at this debate ; but I am a little bit in disagreement with some of your opinions.
      You mix notions out of the debate : the mainly question of the debate is :how the tourism policy can help the development of the State ? I pray for a soulution well balanced between all the actors . A win win interests between them .
      The problem of sovereignity you tell is another debate which depend directly to the GVT Policy . It is a delicate subject that only Bhutanese Policy makers can debate.
      Above , I tend to answer to some of your main opinions to enrich the debate . From a deep debate can outburst the light to get new ideas to win the battle of your country’s development .
      In my mind , the stakeholders are only bhutanese business men who are in relation with tourism affairs . Tourists are only consumers and can only give opinions about the welcome of the country and complain when somlething does not work during their journey by writing to the T.O. Who is the only “enter point” of every problem along their trip .
      In my comments , I try to help my best bhutaneses friends to widen their thoughts among this forced Policy development process . I try to give them new ideas they can try to apply in their today jobs. That my little gift . Because to have ideas is the best for a country to find solutions to progress in development And stay sovereign.

      When you quote selfish international high end hotel , you forget that they give jobs to Young bhutaneses . I suppose you know the hard problem of unemployed and jobseekers men and women in the country. In that case selfish serve interest of the state.

      I never say that Bhutan must welcome to everybody over the world .The expensive tariff create a filter that only fortunate visitors can pass over . And the numerous clausus ( like at the end of medecine exam ) protect Bhutan against any tourist overflow .
      And more , today free tourism is forbidden , and maximum journey authorized is two weeks
      And only a Bhutanese T.O. can obtain a visa for each tourist who will be compulsory accompanied by a TCB licenced bhutaneses guide.
      Those protections are like a dam against the outflow of tourists . And this would be implied to regional tourists . This is a grave problem TCB must manage.
      The GVT try to get money through this third jewel to get the country developped .
      Bhutaneses want better roads , much bridges , many schools , free health treatements , free entrepreneurship , the youths want jobs , jobs , jobs , the remote villages want drinking water , gym yards , forall the youths , many kindergarten , more public transports and all many amenities , and so on . But , in your point of view , explain me how the country do to have money for? Tourism Policy is considered , rightly , as an element for increasing state’s finance. .
      You cannot be sovereign if you need so numerous donators. For instance , regarding india , your country is still heavily subsidized .


      • MIGNIEN
        MIGNIEN says:

        PART TWO

        An other poit of view i do not share with dear Apentho : he speaks about “trample Bhutan ” . I do not understand this expression ; i hope all the best for the material welbeing and confort of every bhutaneses .
        More : the Young bhutaneses want absolutely to have the possibility to live like the others Young in the developped countries . You live in an open world of digital contact . Every Young is connected with twitter , Google , you too and so on . The youths know the foreign uses of life .
        Dear friend , are you in connection with with those youths or are you only turned on your ones in a remote valley ? Why do you fear with us , nice tourist , whom consumption help the economy ?

        When trekkers complain with the dirtiness of the paths , they say that the journey not worth the tariff . An article of kuensel relate that opinion : so there is a big effort to do by bhutaneses themselves who make the paths dirty ( see kuense article ) without any toilets rooms .

        The effort of the T.O. is making tourists happy , so they attract them ; and your point of view : “if tariff is too high for you , do not come to Bhutan and go elesewhere ” is not a fairly welcoming . Have you ever made business with foreigners ? In your village or town have you take part of the managing of the affairs under the gup direction? So that you could know how to manage a group of inhabitants.

        I never saw a tourist “rush and destroy “your landscapes ; but many articles complain with wastes along roads , toilet excrement in any place , violation of chorten whom Bhutaneses are responsible themselves . and not the tourists .

        In french , there is a saying which tell “give a dog a bad name and hang him” . That mean “give responsability on tourist for dirtiness and get them out of Bhutan ” but do not accuse the real profaners , the bhutaneses themselves.

        So that , at the end , consult every day , like me , kuensel articles . And you will be well informed of the life and the inner problems of your country . Particulary lack of discipline of many . Get your thoughts over the earth and you will see the efforts Bhutaneses have to do ! And connect youths and speak to them .

        As for me , i intend to give hope to your fellow citizens for a more wellbeing country I love so much ! And I encourage all my relatives to visit Bhutan and to enjoy immaculate lanscapes . And I tell them “your visit help this tiny country to be developped ”

        To end the debate , i would like to quote Anan Gurung , one of the board Director of Association of Bhutenese Tour operators whom interveiw by Yenten Tinley was published in Bhutan Business on December 5 :

        “Finaly , my last question would be : does the Government really want more tourists ? If yes , then there should be major change in Policy and every gouvernement agencies should support it . Only the tariff structure may not enough .

        And to sum up I quote again Anan with this question “Nobody can be absolutely sure the industry woul be impacted which such poliicy . Tourism industry is very unpredictable and the arguments presented by various stakeholders are purely based on perception on what might happen”

        Le the Lord give energy to the country and His wisdom King.

        Best regards to you Aplenty and thank you for a so fruitfull debate ; I appreciate your contribution .


    MIGNIEN says:

    As my last comments i tend to see the future ; i read very attentively your article above and the the one of nov 28 .
    But you hit two snags :

    1/ The center of your business is mainly the tourists who are the core of your job : without them , the tourist industry would not exist ; with all the stakeholders around ; this industry was declared Jewel N° 3 by P.M. in his presentation of the state of the nation report on last Jun 16 to the Parliament .
    But in your text ( as other texts concerning tourism Policy ) any carefully words are quoted over toutrists themselves with welcome and thanking them ; through their local consumption ; which help the finance’s country .
    What do you propose to them in the future : new paths ( cleaned ) , trek paths ( cleaned) with toilets , new lanscapes , new aeras to discover , best maintance of roads , clean toilets along roads , even in town ?
    Your country is very rich in beautiful areas , whom tourists are excluded because of lack of infrastructure . I can quote Manas area . In those words , i speak only about occidental tourists who yield money to the state ; while regional tourists who earn nothing to the state ; and pay any fees nor tariff ; which is a huge discrimination over occidental tourists.
    That need a voluntarist long term Policy and huge investment . With a return back within about some years with the enhance of arrival tourists .

    Although your neighbors countries , during that time , try to attract tourists with packages and low coast propositions of various services . That risk to result an embezzelment of clientele ; consequently a commercial touristic current may be loosen : the problem will be how to recapture it . I speak only for Bhutan interest i love so much . In Latin words we can quote that as a ” pro domo” manifest ( manifest for the House called Bhutan ) .

    During that time , Inside Bhutan , infightings happen between stakeholders about tourism industry ; each of them struggle for his personal live hoods ; the higher interest of the nation is forgotten . Every man for himself first ! And the interest of the tourits themselves are a little forgotten

    2/ Youths and jobseeckers problems ( 1% over population ) is going to progress in the future if nothing is done ; and if entrepreneurship is not developped ; as i know , not any project is planned over enhancing tourism aera ; the enhancing of arrival of tourists may integrate a lot of jobdseecker ( if they want ) . A planned long term in tourism industry would be studied

    This may reduce a little the feeling of despair of youths which lead to suicide at the worst , or a resignation hidden who do not give to the country a strong task force.

    So it is important for the country to develop the tourism activity ; that my point of view .

    It is astonish to see in that struggle for liberalizing “tariff” that the whole stakeholders fight only with figures concerning benefits. But where are the interests of the tourists themselves?

    But there is not clearly a long planned Policy which go in the higher interest of the country . I hope I am wrong. !

    When does the country will have a visionary Policy makers on long term on the job Under the KING impulsion about toursim Policy ; and will put onwards an attractive Policy to attract more average fortunate tourists.

    That stand the main question ! T.O. can only suggest Policy with their skilled knowledge ; but the decision end to the elected deputies.

    Let the Lord give impulse to the tourism activity in Bhutan , country blessed by Gods!!!

    MIGNIEN says:

    You can see my long comment on the article “LIBERALIZING TARIFF TOPS TOURISM ISSUES AT COUNCIL” of Nov 20 and my answer to SIMPLYME (pseudo) on November 26 at 2.56 over the 7 comments

    This problem is becoming a very battle with different opinions according the financial interests of each others . !! A big number of stakeholders are concernede with !!

    But would you take account of the future tourists interests who feel tariff expensive to come to Bhutan !
    Thank you for them !

    I blame the very favouritism whon regional tourists profits ; and which do not profit anyway to the finance country !!! I wait the decision of the Councillors !!

    MIGNIEN says:

    Excellent text ( part i and ii ) ; as an independent T.O. how do you separate your proper job from TCB ? When i get your name on Google , they direct me to TCB ; how can i contact your proper T.O. business ; site ??

    Nevertheless i apologize for your arguments very clear .

    I come to Bhutan every year through a big T.O. with my proper way direct to DELHI ; because if I contact a bhutanese T.O. directly , avoiding a T.O. in Europe , i reduce the coast coming in Bhutan of about 20% . And more , i benefit of the strong competition between many airlines . The best airline price DHL/PARO/DHL is about 500 Euros going and return . And I can pay easily through my bank the T.O. bank . The airline coast higher is a going and return by Drukair DELHI/PARO/DELHI which coast 600 Euros !!! without any reduction possible ; which is expensive compared to Paris/Delhi .

    But , at this time , few T.O. suggest that to european future tourists ; and i think T.O. would have arrangment to reduce Drukair or Bhoutan airline prices ( inclusive tour with package ). That take part of the core job of any good T.O. , is not it ?
    An the question of liberalizing tariff may be result of a modulation of the tariff according the prestation ( US 250 for us , european ! while regional tourists pay nothing ; this is a veritable discrimination ; are we , us , a sort of lemon to be pressed as soon as we have money ? ) .
    And i do not understand the limitation of two week journey in your lovely country blessed by gods!

    All this words to enhance number of tourists ; but why do you use and fear mass tourism ! Because the visas are delivered only by TCB which can regulate the tourist flux . You must think , as i said in an other comment that a new tourist generation has to be captured ; nowadays , i speak about french tourists , who are about 60 years old and they are fortunate ; the followers are about 40 Years old and are less fortunate than the olders . I feel you think only inner Bhutan problems ; although your job is outside the borders .

    Open your eyes to capture a new flux of tourists OVER THE WORLD which will earn money for the state ( USD 65 ) and for the prestation’s T.O. (185 USD ) . Despite that , the state must do many efforts in the maintanance of the roads , and clean toilets all long the roads , and diversification of meals .

    The debate of liberalizing is very fruitfull ; and can oerate a progress in managing T.O. and eliminate the most fragil T.O. : 1700 T.O. in a so tiny country is , according me , too much ; when TCB deliver licence to a new T.O. , he must have a check to see the solidity and durability of the business .

    Let the lord give wisdom to the stakeholders of this industry to participate to the development of the country . Under the wisdom of HSM The King .
    i love so your country that i wish all the best for the country ; kowing the strengh of bhutanese business mens and womens , so i have confidence in the future .

    • khope
      khope says:

      @MIGNIEN First, I agree with you on several issues about better roads, cleaner trek paths/trails and accessible toilets. It is a civic duty for any nation or state to provide clean toilets for tourists. If certain amount of a nation’s revenue comes from tourism, I would think that the nation would invest in better infrastructure, specially roads and trails, not to mention toilets.

      Having said that, my discontent with some of your ideas include your misguided notion that the T.O charging $250/day tariff is deplorable, as in your own words “this is a veritable discrimination ; are we , us , a sort of lemon to be pressed as soon as we have money?”. No, you are not singled out. If you are a westerner and question spending $250/day that buys you lodging, licensed tour guide, food, and transportation during your visit, you must reconsider your visit. Also, you mention that 1700 T.Os within the country is too high. Why is it too high? If the quality of service suffers due to this high number I can entertain your concern, but do you know how many are actually actively serving guests?

      I don’t think Bhutan needs to “open your eyes to capture a new flux of tourists”. The balance and harmony that exists in the Bhutanese society and culture sprouts from being small, culturally sensitive, and limiting outside influences, including tourists. I don’t think that preservation of culture comes from outside influences. Liberalizing the tourist quota would attract unwelcome guests into the country, and taking the law of averages, it is better to keep more people out rather than let in. Prime example is Nepal.

      So, say no to more tourists, but yes to organic growth.

      Disclaimer: I am not a T.O or a friend of one. I just believe a country should continue to exist without the need for outside influences.

      • MIGNIEN
        MIGNIEN says:

        ANSWER TO KHOPE Just about 1700 T.O.; i will be anonymous ( my informations come from Buthanese guides) but many T.O. work only once a year ; some are civil servant and do this job time to time thanks to friends ; other do not work ; when I say 1700 , it is impossible for any T.O. , even the top ten, to give work to 1700 guides ; TCB tell us that only about 300 are usually on the job . for the others , it an opportunity . And do not forget that regional tourists do not use neither TCB guides nor Buthanese T.O.
        Some do the guide job without licence !
        And , among the top ten T.O. many despair because they lack of cultivated guides ( history , science , Policy , agriculture , fishery , fauna , flora ) , who know how is managed their country , and know a minimum of figures . Because there is not in the country a very school of guides .
        And I add that often the bad english they speak and few speak an other language like German , French , Spanish .
        And they are , some of them , so shy that they do not eat at the same table that their tourists during meals because they do not know the use of knife , fork and spoon as occidental tourists use to do . They are shamed about that . Many tourist dislike guides who eat with their hands .
        In many restaurant , guide eat behind curtain , in a special room , apart from their tourist . In the hôtels , guides are badly considered and the hotelier give them the worst rooms where all the guides and drivers are ressembled like a herd .

        To be a guide is a professionnal job which need some skill competence.

        So it is difficult to give job to all guides licenced , when about 30% of T.O. capte the tourist clientele , and the Top 10 work with 70% of occidental tourists. . So 1700 T.O. for a so tiny country seem to me too much for a reduced market .

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