Council recommends revision in tourism tariff

An urgent need for a policy or an act was among the seven recommendations the house made to revamp the tourism industry 

Tourism: After a one-year long review of the tourism industry, the National Council’s Economic Affairs Committee called for an urgent need of a comprehensive tourism policy and recommended a revision of the tourism tariff.

These were among the seven recommendations deliberated in the House yesterday.

“Considering the significance of the sector and the exponential rise in tourist arrivals, it has become imperative to have a comprehensive policy to guide the sector including unregulated regional tourists,” the committee’s chairperson Pema Tenzin said.

Without a policy, the Bhutan Tourism Rules, schedules of tariff for international tourists 1995 and the Trekking in Bhutan Rules and Regulations 1996 regulate the sector today.

The committee also recommended to enforce a proper pricing mechanism.

Dagana Councillor Sonam Dorji said the tariffs were revised in January 2012 from USD 200 to 250 for peak season and from USD 165 to 200 for lean seasons and a royalty of USD 65 to the government.

“Given the competitiveness of the sector, the existence of multiple players in a fixed tariff system has led to predatory pricing among operators,” he said. “Hence the issue of undercutting which could undermine the core value proposition of Bhutan’s tourism which is to ensure high value and low impact.”

“While retaining the royalty component, the government could drop the tariff itself to ensure that the tourism system maximizes benefits and opportunities and minimizes tourism leakages,” Sonam Dorji said.

Other members also said that the fixed tariff caused wrong marketing and awareness with the misunderstanding of all-inclusive nature of tariff.

Since its inception in 1974, the country has followed a policy of ‘high value, low volume’ tourism, which kept it well regulated.

In 2009, the government announced the policy of ‘high value, low impact’ as part of its Accelerating Bhutan’s Socio-Economic Development initiative and set a target of 100,000 tourists a year by 2012 opening the country to regional tourists as well.

Until 2008, only 27,000 dollar paying tourists and 12,000 regional tourists visited the country. The number rose in 2014 to 133,480 tourists, the majority of which were regional tourists, 68,000. The government has pledged to increase tourist arrival to more than 200,000 by the end of this Plan.

The committee recommended focusing on quality and not just quantity.

“We must be mindful of the carrying capacity of our natural and cultural environment to deal with an influx of tourists that is about one third of our own population,” eminent member and a committee member Dasho Tashi Wangyel said.

He said the government should conduct a research to know the maximum carrying capacity of the tourism activities- both tangible and intangible.

A situational analysis found that benefits from tourism are not spread equally across the country. Although the government pledged to make 20 percent of tourists visit eastern dzongkhags, as of 2014 only 3.6 percent had arrived there.

The committee called the government to spread the benefits to these dzongkhags through more investment in infrastructure and transport sectors, strengthen coordination among agencies, involving local leaders in identifying local tourism products and diversify tourism products.

Pemagatshel Councillor Jigme Rinzin said for instance, Pemagatshel could offer trekking around the place with the route connecting historic places such as temples in the dzongkhag.

Samdrupjongkhar Councillor Jigme Wangchuk said the southern dzongkhags such as Sarpang, Samtse and Samdrupjongkhar should be opened for tourists.

“The security threats have ended in 2003, and these places have ready entry and exits points which would serve as an advantage,” he said.

Without a regulation, regional tourists the review report states were involved in unfortunate incidents including deaths, and other avoidable problems. The committee called for measures to improve travel and experience for regional tourists and avert problems.

The review also asked the government to develop tourism and hospitality professionals by providing more scholarships to fill the shortage of professionals in the industry such as professional guides and qualified employees.

It also found the need for the government to work on a system and procedures for taxation and reporting of earnings from the sector.

National Council will continue its deliberations on the industry today.

Tshering Palden 

5 replies
  1. A duty-bound citizen of Bhutan
    A duty-bound citizen of Bhutan says:

    It’s my earnest advice to all the law-makers of the day, both NC and NA. Do not kill the golden goose that lays golden eggs for extra few hundred thousand dollars by changing the existing tariff system of the Royal Government of Bhutan! our beloved King Jigme Singye Wangchuck has been very visionary to introduce the responsible tourism in the Kingdom, and his vision is not limited by $65 royalty from the high-end visitors. if you’re for liberalizing it, it’s a regrettable mistake. Do you know for what our country is best known for to the outside world today? if it isn’t for this unique tourism policy of the Royal Government of Bhutan, the world will have no business to do with us. We’re too insignificant to be found out if they were to look for us, but it is for this resounding high value and low impact tourism policy of the Royal Government of Bhutan that Bhutan’s best known to the outside world and the people from the world over had admired and lauded us for this and none of them had ever lodged a complaint against the government’s high tariff and this is the only reason why we have been so progressive since 1974, from merely 30 people to now over 200,000 people every year. if some of our NC members argue that the only way forward to achieve regional parity of tourism development in the country is by liberalizing the tariff of the Royal Government of Bhutan, it’s a mistaken belief. in succumbing ourselves to low quality and more volume tourism policy, all you care is $65 and nothing else. if $65 royalty is the only concerned of his Druk gyalpo Jigme Singye Wangchuck, he could have long commanded the opening of his Kingdom fully to the outside world without such restrictive policy put in place. He could have easily let us clear the entire forest for want of money for the development of the country if it was not for the future of Bhutan. and he could have allowed us to mine the untapped rich natural resources to make money. But he didn’t do why? instead he introduced new development model for the country and is known as Gross National Happiness. He was wise enough to model this It’s a work of a wise and visionary leader. What will happen to the tour guides? They’re being marginalized from the very outset and nobody was there to take care of them. It’s a daily battle for them. When the minimum tariff couldn’t look after them well, how on earth the NC members think by liberalizing on the tariff will take care of them? Then, package pricing competition is bound to set in and the visitors will go for the lowest quoted package. and the tour is run on the tight budget and how can we expect the agent we work for expect us to pay well? coming to the question of benefiting few operators, i see liberalizing it will do it even worst than what’s it’s now. only individual few with hotels and the company who are already established with fleets of cars can run the tour and the struggling new comers will ultimately get eliminated. if the existing established companies can quote at the lowest, why cannot they be the ultimate beneficiaries now?
    if we’re for it, Bhutan’s heading for a disaster…………. i wish if they could explore the source elsewhere to fuel the developments. or we could even slow the pace of development in the country that we could convince the voters that voting sb to power is not always promise to give and give.
    let us all respect the vision of King Jigme Singye Wangchuck and not change the tourism policy already put in place and not change the way we promote our country. If NC & NA’s vision is limited by $65 royalties, they could think of other things to make domestic revenues, tourism is not the only option. In a hope to make more money, let us not kill the hen altogether!!!!!

  2. buzzibear
    buzzibear says:

    So are they planning on gouging the dollar paying tourists again? According to discussions in tripadvisor and lonely planet, it appears that some of the dollar paying tourists are getting quite turned off by having to pay $250 dollars a day only to find the major sites completely crowded with lots of ‘regional’ who don’t have spend a lot money, are free to go around wherever they want without a guide. If they don’t think carefully, they can forget all this talk about “high value, low volume” tourism. It’ll be “low value, high volume tourists, the kind who you make very little money from.

  3. kenchola
    kenchola says:

    Moderator please edit my post.

    Estimated breakdown of daily tariff and not “traffic”

    In the last paragraph, first sentence it should  
    My petition to our honourable MPs, please do not make mistake by increasing the daily tariff above $200. Make it affordable to more visitors and beneficial to more Bhutanese.

  4. kenchola
    kenchola says:

    In fact the deliberation on tourism policy has been late as 5 decade have passed running around a single phrase “high value, low volume” policy which was later modified to high value, low impact structuring to the political agendas of the ruling party. As submitted by Samtse NC member in the House, we need Tourism Act before framing any policy to avoid politicking with the sentence structure in the future.

    As for defining “Value” component, the value gained by visitors and quality services delivered by tour operators is the essence in GNH terminologies. The government regulated daily tariff is the pricing component which may be regulated as per the economic situation from time to time.

    While being mindful of our carrying capacity we may need to think the following situations:
    1. 100,000 hotel beds available monthly. Only 8% of these bed are sold out. To break even running costs 50-60 % occupancy rate is required. So we more than 5 time the number of tourists coming in. Most hotels are barely making money to repay construction loans.
    2. Besides RGoB, tourism industry is the largest employer in the country. Other industries are still in the cradle barely crawling up on their four limbs and it may take long time before they could stand on their feet and start helping others, if they are not crippled prematurely.
    3. Hydro powers are number one revenue earners but we are in deep shit of Indian debts. It may donkeys years to clear the debts, if we are not buried under rubble by natural calamities. RGoB sold tourism $ to ease rupee crisis few years back and $ is the only solution to our rupee crisis. We need to earn more $.
    4. More inbound tourists translate to better chances of survival for our arts and crafts. While Bhutanese fancy imported goods, including compound bows, tourists like our traditional arrows as souvenirs.
    5. Our airliners heavily depend on foreign flyers to make daily flights taking Bhutanese to various countries. Likewise, Tashiair would definitely resume if more tourists cone in.

    Now let me share my opinion on pricing component. The statistics for many years show that tourists spent 4 nights in average. 80% of them traveled to only 4 places, namely Paro, Thimphu, Punakha/Wangdue and Bumthang. These four places are most economically developed areas in the country thanks to tourists

    During my last 20 years of working as tour guide and driver many tourists told me that it is the costs which factored in shortening their memorable visit to Bhutan. Most of them said they were not bothered by our road conditions, accommodation simplicity and hot foods. They said that in addition to $200/250 daily tariff, they pay more charges to tour agents at home for tying up with Bhutanese tour operators, simply for playing safe.

    Estimated breakdown of tariff $200:
    – $20 commission to agents abroad.
    – $65 royalty
    – $2 tds
    – $50 hotel accommodation
    – &30 meals
    – $15 transportation
    – $5 guide
    – 5 misc.expenses (m.water, fees, entertainment, etc)

    total expense = $192

    Profit before tax = $8

    The only possibility to reduce going $200 daily tariff is by slashing royalty. Reducing the rooyalty charges from $65/day to $20/day increase the in bound by two fold, if not by many times this regulation would still be a hit expensive for most tourists to come to Bhutan. We could see the following impact immediately:
    1. Earn more hard currency
    2. Creat more employment
    3. Sustain domestic flights
    4. Sustain chopper services
    5. Preserve arts and crafts
    6. allow tourists to travel to all dzongkhangs
    7. Balance economic growth.
    8. More business opportunities to all communities.
    9. Alleviate poverty in remote areas

    My petition to our honourable MPs, please do not make mistake by increasing the daily tariff above $200. Make it affordable to more visitors and beneficial to more Bhutanese.

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