MB Subba

The loan deferment and interest waivers announced as part of the Covid-19 relief measures were just what the hotel sector had hoped for. But the concern now, hoteliers say, is the future.

With the measures, some hoteliers said that they were expecting to get waivers of at least 50 percent of their regular monthly instalments.

President of Hotel and Restaurant Association of Bhutan, Sonam Wangchuk, said, “We are very thankful to His Majesty and the government. The relief measure of such a magnitude was something not expected instantly. It is a blessing,” he said.

However, he added that hoteliers were concerned about the future uncertainties. “Now, the concern is what will happen after these three months,” he said, adding that he believed that the expert group was already working on that.

The HRAB president was of the view that tourism would not be re-opened anytime soon. He said that tourism could open by September or October but that the situation could prolong up to early 2021 in the worst-case scenario.

There are about 665 budget hotels and 145 star-rated hotels registered with the HRAB. However, the number must be higher as some hotels have not registered with the association.

Sonam Wangchuk said some hoteliers would apply for the concessional 5 percent working capital to retain their employees.  

The hoteliers are of the view that it would have been even better if the interest rate was between 2 and 3 percent.

“The ripple effect of the relief measure will be positive. For now, everybody should be happy and satisfied, given the size of our economy, and we would expect more only if our economy was bigger,” he said.

Asked if the relief measure was adequate for retaining staff, the president said that it would depend on their calibre. The tourist season declines from December to February and picks up in March.

He said that some hotels that normally open in January and February remained closed. “So I feel that even with the EMI deferment and interest waiver, it would be difficult for such businesses to pay their staff,” he added.

Most hotels are paying either 50 percent of their salaries or full depending on affordability and generosity.

Expressing gratitude to His Majesty The King, CEO of Wangchuk Hotels and Resort, Thinley Lham, said that the loan deferral and interest waiver had provided an enormous relief.

The relief measures, she said, would help the company pay and retain its employees.

The CEO said that the relief measure would help her to pay house rents. She also said that the deferment of CIT and BIT would help her company.

Zhiwaling Hotel is one of the companies that have sent employees on paid leave. In an earlier interview, the company’s CEO Karma Lotay had said that it did not want to overburden the government.

HRAB president Sonam Wangchuk highlighted the need to look at the rent agreement between hotel operators and the building owners as many hotels are housed in rented buildings.

“The interest and the loan payments that have been deferred go to the owner of the building. This is because if I’m running a hotel in a rented house, I will be still asked to pay the rent as per terms of the lease agreement,” he said.

The HRAB is of the view that about 10 to 20 percent of the loan deferment and interest waivers that the landlord receives should trickle down to the lessee (hotel operator) and the staff. “This is not being done in most cases. The lessee has to pay both staff and rents,” he said.

Most hotels pay between Nu 300,000 to Nu 400,000 monthly.

A hotel owner who did not want to be named said that about 60 percent of the monthly installment would be waived off through the waiver.

He welcomed the relief programmes, saying that they would help him pay his employees. The hotelier, however, added that he had committed to pay the employees even before the announcement of the fiscal and monetary incentives.

He said that the government should look into possibilities of opening some windows to more economic activities, as there is no reported case of local transmission. “ Economic activities should be kept alive,” he said.

What employees say

However, some employees said the salaries they were receiving from the hotels were not enough to pay rent and meet other expenses. Service charges constitute a major portion of salaries in the hotel sector.

A Thimphu-based hotel employee said that she left for her village in Samtse after her hotel sent her on unpaid leave.

“I decided to stay for a few months in my village. I’m worried about paying my house rent back in Thimphu,” she said, adding that she had not surrendered her rented house.

But she added that she felt assured after the announcement of the His Majesty’s Relief Kidu. She said she would apply for Kidu and return to Thimphu.

Another hotel worker said she had joined voluntary service in a quarantine centre after her hotel closed. Many hotel employees said that their house owners had not announced any concessions in house rents and are registering for the Kidu.