Fear loan repayment as interest waiver comes to end

Yeshey Lhadon & Ugyen Penjore

It was the much-awaited day. After over two years of hard work, stress, numerous journeys to the border towns, banks and a few trips abroad, the property, a three-star hotel, was ready.

March 7, according to the astrologer, was a good day for consecration.  Invitation cards were distributed, decorations were readied and monks were arranged. One of the Zhung Dratshang Lopons was to preside over the consecration. On the morning of March 6, everything fell apart.


There are about seven new hotels within a radius of one kilometre in Babesa

Early morning on March 6, the proprietor, a woman in her late 40s, heard about the first Coronavirus case in Bhutan. She could have gone ahead with the consecration, but cancelled everything as news spread about the contact tracing.

The hotel, on the side of Thimphu-Babesa expressway is not yet operational. Yesterday, the proprietor was cleaning the attic to turn into her residence. If the pandemic had not reached Bhutan, the hotel would have seen large groups of tourists come and go. A car rally group had booked all the 41 rooms for three nights, March 27 to 29. Catering for about 70 heads for the next two days confirmed. In the same month, two marriage parties were scheduled at the hotel.

“Everything is ruined,” said the proprietor who requested not to name her or the property. “We can’t ask for more kidu. It is not fair on His Majesty The King or the government. I am worried,” she said.

To at least generate some money to pay the monthly instalment, the proprietor is planning to open the hotel to walk-in clients, offering a huge discount. “We will open the hotel to small gatherings and let all the rooms including the deluxe and suites at Nu 1,500 a night,” she said. At the end of July, she will have to pay about Nu 800,000 as the equated monthly instalment.

Not far from her hotel, two newly built hotels remain under lock and key. The proprietors couldn’t be contacted. The hotels were completed recently. A proprietor and his wife, who bought the property before the pandemic, Kuensel learnt, are in a retreat.

While the pandemic has hit the hotel industry hard, those who completed their hotels recently are the worst hit. The only guests some proprietors saw, after consecrating their hotel, were those sent for quarantine.

On the bank of the Olarongchu, the proprietor of Ugyen Hotel is lost for words when sharing his experience. “I worked blood, sweat and tears for five years in Australia to construct this hotel,” he said. Ugyen completed his hotel in December 2019. When he was ready to operationalize, the pandemic took away his business. “My hotel was booked for four months with some paying advance,” he said. “I almost collapsed. I spent several sleepless nights. I only worry about repayment.”

Ugyen has to pay Nu1.2 million at the end of three months. In February, he estimated a net profit of Nu 2.5 million by July. “Now I struggle with personal expenses. I celebrated the completion of my hotel too early.”

In the north of the city, Hotel Damisa that became operational in mid-January shares the same story. “Business is zero,” said Narayan Gurung, the General Manager. Damisa had confirmed reservations both from regional and dollar-paying tourists. “We had 70 percent reservations, but it’s all gone. Revenue generation is nil,” said the general manager.

Wang Villa at Changbandu had not opened the hotel gates since March after it was used, for once, as a quarantine facility. “New hotels are crashing,” said the proprietor, Dechen Yangzom. She is mulling converting it to office space and renting it out. “There’s zero earning and I have to keep paying utility bills, some of which are very expensive even with the hotel closed,” she said. She paid Nu 23, 000 as water bill and Nu 6,000 for (how many months). “I feel like I got Coronavirus. This headache is ruining my life.”

Back on the expressway, the owner of Hotel Nana that was completed in March is already planning to sell his property built on 40-decimal land. The 40-room hotel has never received a guest. It remained closed today.

All eyes on the government

With the three- month EMI waiver and loan deferment coming to an end this month, hoteliers are worried what will happen to their properties. All are waiting and praying that the government extends the grace period.

“It would be helpful if the government could defer loan repayment till the hotel business picks up again,” said Hotel Nana’s owner, Krishna Bahadur Kharka who owes a bank Nu90 million.

There is no other alternative to pay, according to Ugyen Hotel’s Ugyen Dorji. “I’m apprehensive of what will happen. The worst is banks seizing our property,” he said. Some are suggesting deferring the repayment without penalties for a few more months even if interest is not waived. “We could make up when business returns,” said one.

Another proprietor is confident that the government will look into something so that the hotel industry does not crash. “Our capable leaders will show us a path. We can only pray the pandemic gets over soon,” she said. “The last interest waiver and deferment was for all the people who borrowed from the banks. The government could consider the worst affected businesses like hotels and the tourism industry.”