Budget hotels benefiting the most

Younten Tshedup 

With no alternatives, hoteliers are banking on the 21-day mandatory quarantine rule to keep their businesses afloat.

The government pays Nu 1,000 to Nu 2,500 to hoteliers who offered their property as quarantine centres based on hotel categories. The amount is inclusive of three meals a day and utilities such as Wi-Fi, electricity and water, among others.

There is a rush.

Cabinet secretary, Sangay Duba, who heads the quarantine facility protocol, said that with the increase in requests from hoteliers, the team has started using facilities on a rotational basis specified by the health ministry.

However, during the initial phase, he said that not many came forward except for a few volunteers. “Many didn’t know that Covid-19 would prolong and stay this long. Without any business, they are now coming forward.”

The government has so far spent over Nu 1.32 billion to hoteliers where over 8,500 people were quarantined upon their arrival from overseas or India. Almost 200 hotels across the country have been identified as quarantine centres, majority are in Thimphu and Paro.

Sangay Duba said that with over 800 people still utilising the facilities across 52 centres and more people coming in, the expenditure would increase in the following months.


Are hoteliers making profits?

As the prospect of business picking up remains remote in the light of the current pandemic, the nominal support from the government is what many hoteliers are counting on.

Requesting anonymity, a Thimphu-based hotelier said that the support from the government was enough to pay staff salaries and provide the specified amenities to those in quarantine.

Three days after the inauguration, one hotel owner had to close business due to the Covid-19 pandemic. Instead of closing the newly opened three-star hotel, she decided to provide the facility as a quarantine centre. She was one of the first to do so.

“The hotel was going to be closed so we decided we can let the government use it. This was the least we could do to support the country during the difficult times,” she said. The Nu 1,200 for single occupancy and Nu 2,000 for double, she said, was enough to cover the expenses even after including meat on the menu.

One of the first proprietors to offer his facility as a quarantine centre in Paro, Karma Jigme of Tashi Namgay Resort said the amount provided by the government was just for the food and other utility bills. “I hosted people on two occasions and almost 90 percent of my rooms were occupied. The amount was barely enough to pay for groceries, vegetables, salaries and utility bills.”

Karma Jigme said that even with the electricity and Wi-Fi concessions, there were other expenses when the facility was running. “Even when there are no guests, the hotel needs to be regularly maintained adding to the expenses.”

He said that there was no profit from the money paid by the government. Normally, the hotel operates at 100 percent occupancy during peak tourist season and at about 50 percent occupancy during off seasons.

A regular room charge at his three-star hotel is Nu 5,000 (twin sharing) with two meals per day subjected to 20 percent tax.  “So there is no question of making profit at this rate,” he said.


The flipside

Hoteliers shared that making profit from the government approved rates was possible mainly from the food. Although there is a prescribed menu for quarantine centres, there are hotels that don’t adhere to the recommended menu.

Secretary Sangay Duba said that in some isolated cases there were a few hotels that did not provide the items as per the requirement. He said budget hotels especially those in Phuentsholing benefited from the government support, as many commodities were slightly cheaper there.

Most hotels, especially the budget hotels, did not have full occupancy even when tourism was flourishing. Now with almost 100 percent occupancy in these facilities and some getting more than one group of quarantine people, the revenue generations for these hotels are expected to increase.

Also it was learnt that the regular rate of some of these budget hotels are lower than Nu 1,000 per day.

There are also some hotels beside budget hotels that possibly profit from the quarantine money.

For instance, a three-star hotel with 20 rooms charges around Nu 3,500 for a night. Most of these hotels offer a complimentary breakfast.

With 100 percent occupancy, a week-long stay at the facility would earn the hotelier about Nu 490,000. The same hotel operating as a quarantine centre at Nu 1,200 (minimum) for 21 days still earns more than Nu 500,000. For twin sharing rooms, the hotel would make around Nu 840,000 in 21 days.

The implication

While the debate of hotels making profit from the quarantine centres is subjective to operational methods, hoteliers said there is definitely a negative branding once a hotel is identified as a quarantine centre.

One Thimphu-based hotelier said, “The reason I don’t want to give away my identification and hotel’s name is because there is a strong social stigma from local residents.”

He said that people fear walking near the facility once they know it has been or is currently used as a quarantine facility. “Our intention was simple, to help the government in our own small ways but such an impression would have a negative impact on the business in future.”

Another hotelier said that while the government has pumped in a lot of money for quarantine centers, without the goodwill of the hoteliers, the expenses would have doubled by now.

“We offered our furnished facilities to be used as quarantine centres voluntarily. It was noble on the part of the government to provide us with a nominal amount for which we are grateful,” he said. “But if it wasn’t for these hoteliers, there could have been possible community transmission by now since most of the positive cases are from these centres.”

At present, he said that without business, many hoteliers are turning to the government for support. “The government has provided their support, to the best of their ability. It is time the public also provide similar support to the hotel industry.”