The service sector, particularly the tourism and hospitality, trying to recover from the economic downturn in the past few years, will be a topical discussion in both the National Assembly and the National Council. There are issues, challenges, and lobbying too, as sustainability, not profitability, is at stake.

The National Council has brought up regional disparity in tourist arrivals with not many travelling beyond Bumthang. Tourist arrivals are increasing, even if not to the pre pandemic level. However, it is the hotel industry that is making the loudest noise as the increase in arrivals is not resulting in occupancy rates. This is in the western region, including in the capital city where the concentration of hotels, particularly three-star hotels are located.

Hoteliers are meeting, discussing and planning to submit to the government for change in policies, including replacing the daily sustainable development fee (SDF) with a one-time visa fee. They are even calling for a moratorium on new hotel construction, as they see the market is saturated.

There are about 400 hotels in the country, most concentrated in Paro and Thimphu. In Thimphu alone, there are 64 three-star rated hotels. With an average of 20 rooms, there are 1,280 rooms available in the capital city alone. This is more than the demand given the steep drop in tourist arrival rates. While it would be unfair to stop constructing hotels, the market force will determine numbers, competition, and quality of services.

Big hotels are not part of the complaining group. They have their guests and are comfortable, perhaps because of their marketing strategies.

However, not listening to the plea or intervening through policy would have implications. What we can foresee are loss of jobs, closures and loan repayment defaults after the extended loan deferments in seven months from now, June 2025.

There are already concerns about fronting or outsiders running hotels in the country because the current conditions are ripe even if it is unlawful. There are reports of tour operators in places, even in Jaigaon,  running or owning hotels, buses and agents in Bhutan. Some are already tying up with Indian businessmen when they plan constructing hotels to ensure that there is a continuous supply of guests.

This is happening because the current policy encourages it. A real estate developer constructing  a hotel in Thimphu is partnering with an Indian to ensure that there is a continuous supply of guests. The condition includes hiring an Indian chef to ensure that the guests get to enjoy authentic Indian cuisine far away from home.

In the meantime, the implications are not what we wanted or planned when we revised our tourism policy. The tourism and hotel industry cannot be separated. Every policy we make for tourism will have implications on the hotel industry. As June 2025 nears, we go through a low tourist arrival period, and many hoteliers are panicking.

We have a vision to transform Bhutan into  a high income GNH economy by the end of the 13th Plan, 2034. Tourism is considered as an important sector to achieve the long-term goal. It is no more a long-term goal. We have less than five years until 2034. At the moment, we are looking down a long dark barrel.