Yangchen C Rinzin
People in the tourism sector are not happy with a proposal in the draft 21st century economic roadmap.
The draft report proposes an introduction of one-time visa or sustainable development fee of USD 325 per tourist per visit for two weeks stay and additional USD 30 per night thereafter.
But those in the tourism sector said introducing a one-time fee would lead to doing away with the minimum daily package rate (MDPR).
MDPR is the minimum amount that has to be paid per person per night halt where sustainable development fee (SDF) of USD 65 per person per night is also included. Today, a tourist pays USD 200 and 250 per person per day during the lean season.
Founder of Bhutan Sustainable Tourism Society, Karma Tshering (PhD), said introducing one-time fee is an inclination towards doing away the MDPR and taskforce should not do away something that is actually helping tourism sector.
“If we do away MDPR, then tourists would negotiate price, which would affect the revenue to the government,” he said. “Doing away with MDPR will only benefit tourists.”
He said there are other important issues that need more attention in the tourism sector.
Karma Tshering added that doing away with MDPR would lead to bargaining power for tourists and thereby reducing the margin to tour operators.
The tourism sector instead recommended for upward revision of MDPR that has remained the same since January 2012.
Tourism Council of Bhutan’s (TCB) director-general, Dorji Dhradhul, said that one of the key elements of Brand Bhutan is the levy of SDF, which makes Bhutan a unique destination.
“I feel it’s not good for us to merge the visa fees and SDF and these two levies should be kept separate, as they’re one of our unique selling points,” director general said. “Presently, the visa fee is USD 40 per person per trip.”
Dorji Dhradhul said TCB and its members submitted their concerns to the taskforce members sometime in December.
He said that the visa/SDF rate of USD 325 for 14 days proposed by the 21st-century economy road map, which calculates to USD 23 is way below the present rate.
“Integration of visa and SDF is contrary to what TCB is planning. We plan to increase the SDF,” he said, adding doing away of MDPR will have irreversible damage and not guarantee the expected revenue increase.
The director general said that MDPR does not restricts or limits maximum spending. “We know some tourists spend more than MDPR like high-end tourists. Lean season discounts and deferment of SDF will conflict directly with the tourism policy’s vision to promote Bhutan as 12 months’ destination.”
TCB in consultation with its members had also expressed their concern on MDPR to the taskforce that MDPR would become irrelevant when Bhutan reach first world standard.
Members reasoned that until then, Bhutan should concentrate on addressing other issues impeding tourism growth and development.
“It’s not the right time to do away with the MDPR because we’ve not yet achieved the aspiration of high-value low volume and reopening of tourism is expected to pick up slow,” the members submitted. “It would be paradoxical when Covid-19 is reinforcing countries to avoid mass tourism.”
They also stated that MDPR is among many reasons for low out-of-pocket spending and there is a risk of becoming low-value low volumes encouraging mass tourism destination. This would discourage high-end tourists visiting Bhutan.
An official from TCB said that although they once tried to separate MDPR for cultural tours and trekking tours the government did away the system, as there is no mechanism to regulate or monitor it.
“The recent example is SDF waiver in six eastern dzongkhags of Bhutan to attract tourists, which was later done away but this was not because of MDPR issue,” official said. “These only shows there are various reasons than MDPR to attract more high-end tourists.”
Members also expressed that without MDPR, there will be issues, as the sustainable tourism policy of high-value low volume would be compromised or undermined, loss in foreign exchange earning and direct government revenue.
They also submitted that there was no account of the contribution made by the other types of tourists (official, personal guest, regional tourists) who are exempted from MDPR. “This meant without a proper system to account for the spending and forecasting their spending cannot guarantee the promotion of Bhutan as a high end destination.”
Other issues identified were tax evasion and money laundering, difficult in tracking tourism payments, may create conditions difficult for small or new tour operators, aggravate fronting in tourism and decline in tourism earnings. “The MDPR ensures that the minimum threshold for the competition with minimum service standards. But without MDPR, the competition would focus on minimal pricing resulting in minimal tourism earnings,” members submitted.
An official from the TCB said that there is a general misunderstanding that MDPR is a maximum tariff and there is no space to charge beyond MDPR. “This is not true because MDPR is a minimum rate and one can always charge more than USD 250. In fact, we have who spends more especially tourists staying in high-end hotels.”
He explained that most offshore agents transfer only the MDPR and keep the rest earnings. “Owing to shortcomings in the policies and practices, MDPR is often not fully realised.”
In the recommendations submitted to the taskforce, members also mentioned that MDPR is still viewed as total MDPR amount charged only for visa and SDF. “This has often described Bhutan as an expensive destination.”
The official added that it is not true that MDPR restricts tourists to choose their choice of services and encourages undercutting practices.