June 10, 2024
THIMPHU – Tourist arrivals are increasing, so are the concerns among those in the business. If what tour operators and hoteliers claim is true, they are finding themselves on the losing end.
Changes in policies may be well intended, but if foreign agents across the border are dominating the market, determining the rates that result in significant economic losses, we need to intervene. As an expensive destination for many, tourists would want to make the most of their trip. This includes cheaper packages. The agents who can now handle visa applications, itineraries, and hotel reservations also determine hotel, guiding rates without having to involve local agents.
These agents only deal with tourists from India where even if they can afford better or more expensive packages, which many say they do, decide what rates our local agents or hotel receive.
Looking at the numbers, the possibility of an influx of tourists coming through cheap packages is real. The 2024 visitor arrivals breakdown shows that 66 percent of the total 64,941 tourists as of May 31 originated from India. It was 58 percent in April. Bhutan, some operators say, is not a high-end destination.
Then there are other concerns like agents doubling up as informal currency exchange centres that could not only devalue the Ngultrum, Jaigaon alone possessing more but turn black money into white. There are informal reports of more than a billion Ngultrums circulating in Jaigaon, across the border in Phuentsholing, alone. While the Ngultrum is pegged to the INR, it is devalued at the informal exchange counters.
With all the realities on the ground, those in the business are convinced that the government is only concerned about the sustainable development fee and not about the rest of the industry. This is best explained by a hotelier who is selling the three-star hotel at a discounted rate with two free meals. For her, a lower rate is better than keeping the rooms closed.
There is something really amiss if hoteliers and tour operators who usually are after incentives and tax holidays are talking about the change enabling tax evasion. This they attribute to the lifting of the minimum daily package rate. Without it, after the SDF whatever is spent is in cash. Some say the hard currency is not reaching the government even if it benefits them.
If those in the industry are seeing loopholes and alerting authorities, we need to plug them. The concession on the SDF is effective until August 31, 2027. Three years is a long time to cause more damages if the claims are true.
We have the lean season to discuss, learn and unlearn from the experiences or ground realities even if big players in the industry are not among those complaining. A learning from experience session from the spring season could provide insights and an opportunity to undo what is damaging the tourism and hotel industry.