Budget hotels to be affected

Yangchen C Rinzin

The hotel industry that has seen an explosion in recent years and directly dependent on tourism will be in for shake up with the Tourism Council of Bhutan relooking at the tourism policy.

The council, a government agency, has an objective –  reacting, rethinking, and recovery post-Covid-19. The recovery post-Covid-19 is to look into tourism policy and make tourism efficient.

One of the many strategies, an important one, is to reinforce Bhutan as a high-end tourist destination and strictly implement the “high value, low volume” policy.

This means hotels, especially budget hotels, might have to rethink about their business modules post-Covid-19 because of the change in policy the government is looking into. Emphasising on Bhutan as a high-end destination would mean providing tourist with star-rated hotels and high-end tourists facilities.

Following the impact on the hotel industry and the loan interest waiver and loan payment coming to an end, hotels might have to look into strategies to survive.

The government is discussing with Royal Monetary Authority should the deferment continue, which is expected to be announced next week.

But Prime Minister Dr Lotay Tshering told Kuensel that it is important for hotels to relook into their business strategies and see if they still want to continue as a hotel or look for alternatives, for instance, converting to apartments.

Lyonchhen said Covid-19 has taught that there is a need for overall assessment of the hotel industry, as it is not sure when and how tourism will pick up.  “Government cannot keep supporting them forever to pay the loan,” said Lyonchhen.

Meanwhile, the government will conduct a survey on hotels and loans hotels have availed to help government come up with a business strategy. The survey is expected to suggest why certain hotels are not viable and provide options on what these hotels can do.

Lyonchhen said that it was time Bhutan experience “high value, low volume” in real sense post-Covid-19.

“This means it should not be based on numbers of tourists visiting Bhutan like it is the current practice,” Lyonchhen said. “The current situation has made tourism sector, which includes hotels realise this gap and now Bhutan must raise the bar.”

Members of the Hotel and Restaurant Association of Bhutan (HRAB) agree that there is the need to relook how they define high-end tourists and how the government would reach out to them. Hoteliers expressed that government needs to work on the market to promote high-end tourists if it is serious about achieving this.

Many shared the government must come up with a clear strategy.

“How serious is the government with high value, low volume policy?” one said. “It’s time to make this policy a reality.”

In terms of infrastructure, we have 159 tourists hotels, 129 three star, 14 four star, 16 five star. In addition, we have 156 home stays and 665 budget hotels as per TCB’s record.


What’s left for budget hotels?

It is not only making the country a high-end tourist destination that could hit the budget hotels, but also the decision to levy sustainable development fund (SDF). A SDF of Nu 1,200 for regional tourists would be levied on the tourists visiting any dzongkhags.

Levying of SDF and tourism looking into high-end destination would mean reduction in coming of regional tourists. This would affect budget hotels, as the notion is that budget hotels have mushroomed over the years because of regional tourism. Tourists from India, Maldives, and Bangladesh are considered regional tourists as they were exempted from the SDF.

Increase in high-end tourists would mean increase in the paying capacity, which ultimately means hotels would have to provide the best services with standard facilities. However, the notion is that budget hotels do not have such standard facilities.

Lyonchhen told Kuensel that government must explain to the budget hotels and they must remodel their business. “We don’t have the right to say we don’t want budget hotels because of a new policy,” Lyonchhen said. “However, they must also realise the importance to make their hotels attractive enough to attract high-end tourists.”

HRAB members said that it would not be easy to change budget hotels overnight, but the government should be clear with their strategies instead of doing away with the hotels that are already established.

“If the government decides to do away with budget hotels, they must help us to sustain our business,” a hotel owner said.