The daily tariff alone is not enough to sell Bhutan as a niche destination
Tourism: The ongoing debate on the proposed changes in the tourism industry has, among others, sparked a debate on whether Bhutan really is a high-end destination.
Although governed by “high value, low impact” policy, the reality according to tourism stakeholders is that it’s only on paper. They attribute this to undercutting, unregulated regional tourists, the existing marketing strategies and lack of facilities.
The minimum daily tariff of USD 250 and 200 a day a tourist is the maximum ceiling but most tour operators sell for less. The industry also lacks innovation and creativity with a majority of the tour operators bringing in cultural tourists every year.
Hoteliers said the hospitality industry is almost “sick” owing to bad debts and that services are deteriorating despite the increasing competition.
A manager with a tourist standard hotel in Thimphu said that to recover her staffs’ salary, she doesn’t have a choice but to remove certain facilities and offer a huge discount. “But at times, it doesn’t make sense to bring down the price when we cannot even break even,” she said.
A three-star hotel owner in Paro said the room to staff ratio should be 1:2 but most hotels are unable to employ more. “If tour operators are willing to pay, we can offer better services and employ more staff,” he said.
In the present tariff system, tour operators keep a budget of about USD 30 a tourist for three meals, tea and snacks. Small vehicles hired for tourists are paid Nu 18 to 21 a km while coaster busses categorized as medium vehicles get about Nu 30 to 35. Guides are paid Nu 500 to Nu 1,500 a day during peak season while in the lean season they get about Nu 500 to 1,000.
It is alleged that tour operators sell tour packages for as low as USD 130 to 160 a day a tourist to agents abroad. This, hoteliers said affects the overall industry and service delivery.
Although the annual tourism report’s exit survey rates the hotel services high, hoteliers said they have no choice but to offer 30 to 40 percent discount throughout the year. For instance, today a three-star hotel sells for Nu 1,800 to 2,000 while a four-star sells for about 3,000 for a twin room.
Hoteliers contend that tour packages or hotels and guides in places like Darjeeling and Sikkim, considered budget destination, sell at a higher rate than Bhutan.
Hoteliers said that a high-end destination like Bhutan where tourists pay USD 250 and 200, hotels and guides come cheap. In the neighbouring countries, guides are paid on an hourly basis.
Food complaints are high every year among tourists. While tour operators blame hotels for monotonous menu, hoteliers justify that the menu depends on the amount tour operators’ pay.
Some hoteliers also said that tour operators take tourists to restaurants in town that no locals know about and not quality restaurants. The trend is also that guides decide where a tourist should eat or visit (handicrafts) based on the commission they get.
A majority of the tourist sites in the country don’t require any fee.
Unregulated regional tourists
Bhutan recorded 99,709 tourists as of August 31 this year of which 32,877 were international visitors and 66,832 regional visitors. While this is an overall increase of 30.83 percent, in terms of international tourists, this season saw a drop of 14.62 percent.
Regional tourists recorded an increase of 77.25 percent compared to the same period last year.
Visitors from India, Bangladesh and the Maldives are referred as regional tourists. Unlike international tourists, regional tourists are exempt from paying the minimum daily tariff. They also do not require visas to enter the country.
Until a couple of years ago, regional tourists were not part of the tourism statistics but now that their numbers are used as a yardstick for achieving targets, tourism stakeholders call for a policy to effectively manage and optimize tourism benefits. The surge in the regional tourists is already seen as an impact on the dollar-paying tourists.
Even Tourism Council of Bhutan’s (TCB) marketing strategies and effectiveness needs a re-look as clearly indicated in the annual tourism reports. Until 2011, the tourism exit survey cited “word-of-mouth” as the most important source of information for tourists to visit Bhutan.
The information was removed from the report since 2012. TCB has about six public relation (PR) agents in six countries. Sources said that every PR agents are paid about USD 1,500 a month.
About 400 of the 1,700 registered tour operators are operational. The top 10 handle about 30 percent of the tourist arrivals. Every year, about 80 percent of the tariff-paying tourists are cultural tourists while about 10 percent visit Bhutan for trekking, rafting and others.
The 2011 tourism monitor states that when a tour operator charges less than the prescribed minimum daily tariff to attract budget-conscious visitors to Bhutan, it leads to unsatisfied visitors that has direct bearing on the most important marketing tool for Bhutan – the ‘word-of-mouth’.
“There are prevailing speculations that tour operators who undercut provide sub-standard services and facilities to their clients and as a result tarnish the image of Bhutan as a high-end destination,” it stated.
A high occurrence of undercutting was prevalent as indicated in the exit survey of the 2011 tourism report where about 19 percent of respondents paid less than the prescribed daily tariff.
“This finding necessitates a proper monitoring mechanism in order to dissuade tour operators from undercutting,” stated the monitor.
National Council member Pema Tenzin said the country’s experience is sold at a lesser rate than the room rates of hotels such as Taj Tashi, Uma and Aman. “And a Bhutanese spends more in Bangkok than a tourist spends in Bhutan,” he said.
“The fixed tariff caused wrong marketing and awareness with the misunderstanding of all inclusive nature of tariff,” the council’s committee report stated. “More so the profit is harvested by overseas middle agents at the cost of Bhutanese tour operators.”
Lack of specialized guides, proper infrastructure for tourist, investment and high-end quality services are prominent issues affecting the industry today. The industry is also in dire need of a vision and strategy for the way forward. Coordination among stakeholders, professionalism, lack of sustainable marketing strategies and a tourism master plan are also issues confronting the industry today.
Besides lifting the daily tariff, the Council’s economic affairs committee also recommended the government for an urgent need of a comprehensive tourism policy, regional spread of tourism benefits and regulation of regional tourism.
The Council recommended creation of gainful employment and fair reporting of tourism earning sector. The tourism review report questions the role of tourism taxation and its impact on the competitiveness and attractiveness of the destination.