What will happen to us? This is the question on the minds of most hoteliers today with the loan interest waiver and loan repayment deferment coming to an end this month.
While the big and the well established can absorb the shock sent by the coronavirus wave, there are hundreds, even thousands, of hotels that are expecting another round of fiscal or monetary policies. Since March, there have been no tourists in the country. Newly completed hotels are waiting for their first guests. The old ones are competing for being a quarantine facility for the Nu 1,000 per day per person payment the government pays. This is how desperate the industry is today.
The Covid-19 pandemic has affected the hotel industry badly. But the writing was on the wall. Long before the coronavirus pandemic, concerns were raised on the explosion of hotels as the herd mentality led to a hotel building frenzy. In Thimphu, it is no exaggeration to say that a new hotel is completed every other month. Some are still building even after knowing the consequences.
Our policies are kind to the industry. Loans are cheaper, there are tax waivers for importing furnishings from as far as China and there are tax holidays. While some bankers are hoteliers, some hotels are built with foreign money.
As of September 2018, there were 105 star-rated hotels registered with the Tourism Council of Bhutan. This increased to 160 as of March. There are actually more budget hotels that are not declared besides the unknown number of private buildings and houses turned into hotels.
Meanwhile, places like Babesa, once paddy fields, are crowded with hotels, some remaining under lock and key since the pandemic hit the country. The promise for children’s park, community halls, solid waste disposal sites and many other amenities that convinced the once farmers of the locality to pool land and turn the village into an extended city are nowhere to be seen. Locals say that for every name of their once paddy fields, there is a hotel.
It is an irony that our policy makers had to be nudged by a pandemic to relook into the policy. It is late, but like we say, better than never. The government stepping in is a welcome and a bold decision.
The hotel and tourism business cannot be separated. If the government and the TCB are going to reinforce Bhutan as a high-end tourist destination and strictly implement the “high value, low volume” policy, the hotel industry will be forced to strategise.
The focus on the one-line policy emanated from the wisdom of The Fourth Druk Gyalpo has gone missing. This is evident from the low impact becoming high impact and mass tourism became the norm as the noble intentions were sabotaged by business and political interest. Mass tourism thrived and it led to the expansion of hotels.
When there are no tourists looking for cheap hotels, standards will have to be improved. The sustainable development fee of Nu 1,200 per person per day makes Bhutan expensive for regional tourists. However, it is not to say tourists from the region are cheap. There are groups, who stay in high-end hotels or come through tour agents. These groups are also among those complaining of Bhutan losing its exclusivity as they see and meet more of their folks at all tourist hotspots.
We need not crack our heads looking for a new policy. The “high value low volume” vision of the 1970s had become more relevant today. The vision was spelled out clearly, as a guide four decades ago, foreseeing the blunders we would make.
It is wiser to look for guidance in the vision and take tough decisions. Some hotels will have to close, some will upgrade and employees will have to find new jobs. The government can help them in the transition. It would be a suicide to repeat the mistakes.