Last year the tourism industry prospered with an overall increase of 21.5 percent growth from 2016. A total of 254,704 tourists visited the country compared with 209,570 the year before.
However, besides increasing number of tourist arrivals annually, all is not well in the industry.
Hotel and Restaurant Association of Bhutan (HRAB) has charged four tour-operating agents to court for the nonpayment of bills to some 22 hoteliers in the country.
It was learned that the four tour agents had not paid the service charges worth more than Nu 3 million to several hoteliers for a long period of time even after receiving the money for the Tourism Council of Bhutan (TCB).
HRAB’s executive director, Sangeeta Rana, said that the issue of bad debt had been happening in the tourism industry for almost two decades. “Without a strong system to resolve the issues, many of the hoteliers resorted to solving the issues on their own in the past.”
She said that after failing to tackle issue, the association had no other means but to take the defaulters to court. “We requested the TCB to help us resolve the problem but even they could not do anything about it.”
In August last year, the association hired a private legal firm and charged the four defaulters to court. Of the four, one made the payment amounting to Nu 460,344. Another agent is due to pay by October.
One of the tour operators who agreed to clear the dues on installment basis, absconded after paying just the first installment of Nu 184,601.27. The operator has a due of Nu 553,802.8. Along with him, the fourth operator has also fled the country.
“Our legal firm is on the look out for the two tour operators. We have also informed the police about their escape,” said Sangeeta Rana. “If they fail to comply by the court’s decision, we’ll have no option but to give out their names in the media.”
A tourist paying USD 250 and USD 225 during the peak and lean seasons is directly credited to the TCB’s account. The council after verifying the details of the tourists and deducting USD 65 as royalty, transfers the remaining amount to the individual tour-operator’s accounts.
The operators then have to pay the service providers like the hoteliers, tour guides and transportation operators for their services.
“This has not been happening which is why we have a big issue of bad debts,” said the executive director.
HRAB’s chairman, Thinley Palden, said: “This is a bad practice that has been happening for a long time. It is not good for the sustainability of the hoteliers when they are left without payments for almost a year.”
He said that taking legal actions against the defaulters had large financial implication on the association. “However, the serial defaulters have left us with no other option but to take legal actions against them.”
Sangeeta Rana said that the initiative proved successful.
Officials from the association suggested that operational reforms in the system like facilitating TCB to make direct payments to the hoteliers.
Thinley Palden said that a regulation needed to be put in place that would direct the tour operators to make the payments to the service providers as soon as possible. “If operators fail to pay, there should be a penalty made for the defaulters.”