What determines a high-end destination?

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.

Hospitality

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.

Marketing 

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.

Recommendations

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.

Kinga Dema

1 reply
  1. Simplyme
    Simplyme says:

    When things go wrong from our side we have the audacity to blame others! We blame our neighbors, the system, the community and the government and we cry over and over with the hope that an outside factor will solve our problems. This is the common trend in Bhutan. The same equivalent strength, energy and time if focused to solve the problems that is on your shoulder, then the world will be a better place to live in. Everybody has their own role to play and if that is played with honesty, sincerity and in complete, the shameful game of throwing blames at each other will be up-rooted.

    Bhutan has always been a high-end destination for any travelers. We have tourists planning for Bhutan as long as 10 years prior to travel, and, after making their historic visit they leave our country with the relief that it was worth the wait and that Bhutan is indeed a country still unique and different from the rest of the world. Now with the easy access to digital information, international TV channels, travel magazines and social media, Bhutan is being repeatedly showcased as an exotic and high end destination of the present times. With all due respect, it is not the result of persuasive advertisement by the Tourism Council or anyone in the industry but because we are culturally unique with a unique tourism policy of High Value Low Impact that brands Bhutan as a high-end holiday destination. Tourists visiting Bhutan has only glowing reviews and experiences of Bhutan (save for few who are hard to please or due to some mishaps) and Bhutan is a brand that speaks for herself in the international tourism arena. We must all be proud of being a part of this industry and the country as a whole. The concerned stakeholders who believe that Bhutan as a high-end destination is only in papers are those who did not play by the rule or failed to play and the system came up against them and thus the game of throwing blames.

    A lead hotelier in Thimphu proudly informed that his hotel has been at the top for two consecutive years in terms of occupancy and ratings by tourists. He said that when he first started his hotel business, he was amazed to find that some hoteliers were under the influence of some snobbish tour operators who were being played under their mercy. Instead of demanding more for the quality service provided, these hoteliers started playing the weaker part in the bargain and the tour operators took advantage in this field. This actually paved the way for the hospitality industry becoming “sick” as mentioned in the kuensel. However the said lead hotelier stuck to his guns and apart from providing the best services, did not negotiate or go down on the room rates just because few top tour operators bargained and promised ‘more tourists less rates’!

    Say, if the controversial liberalization of daily tariff for visiting tourist comes into effect, will these hotels improve in their service delivery and profit? As in the current scenario, when tour operators have the fixed daily tariff in their kitty to spend, the hotels could not take advantage of this, then will the liberalization of tariff improve their health and pockets? We have many good 3 star or similar standard hotels spread all over our country who sells at Nu 3,000.00 to 5,000.00 a night, but still difficult to get a reservation with them, be it peak or lean seasons and, on the other hand we have the same standard hotels who sells like Nu 1,800.00 to 2,000.00 and willing to offer further discounts if we look into for long term business. This is the unfortunate fact and the two sides of a coin. As a service industry, pricing should just be one of the many factors, and the most important should be the quality of your service which determines your business, and to serve with quality you need to play by your own rules and maintain your standards both in your service and your morals. Nobody minds paying a little extra for better service and quality.

    There are tourists who never negotiated with the daily tariff and there are tour operators who never bargained over the room tariff, because quality and timely services is what all the stakeholders including the tourists want. Indeed in the long run, whether the fixed daily tariff remain the same or gets liberalized, only those who provide and maintain quality services will succeed and for those who cannot cope up will keep on blaming the system with some other issues. This is hospitality and service industry and no set rule per se but to adhere to the highest quality service and best product and charging/demanding the price accordingly.

    It is true that hotels in Sikkim and Darjeeling are more expensive than hotels in Bhutan which is very sad news for us, especially when the world praises Bhutan as a high-end destination and not places like Sikkim and Darjeeling. It is because they have their pricing policy and for them it is a business and not charity and don’t go beyond break even. They build their reputation in terms of service and not by the low room tariff they offer. These are the hotels who stand by their rules and not fall at the mercy of some unhealthy influence of tour operators.

    It is a simple fact that if you sell your rooms at a low price, as low as break even, you will not be able to provide quality service and you are not fit to survive in the market.

    Also, one of the most important expectations of a traveler is to explore the local food and cuisine. Most of the tourists are not happy with the meals at the hotel they stay in because of the repeated buffet menu and less varieties as compared to the local restaurants where one can order ‘a la carte and local. This is the reason local restaurants catering to tourist are flourishing in all the places and these are the restaurants that serve the unique Bhutanese culinary tourism experiences that the tourists enjoy. The local restaurants may be a little more pricy but then again it is not the price but the service and quality that matter. And in the end a happy tourist means a happy and satisfied review of their Bhutan experiences!

    Otherwise, you have your customers in hand; don’t let the other competitor snatch it away and if they do, don’t blame, its your weakness and you filed to play your part.

    So all tourism stakeholders, let us be fair to each other and face the competition with a healthy mindset and attitude and stop throwing blames at each other, at the system and the policies.

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