Tour Operation Licensing
The earliest tour operator was the DoT/BTC. I suspect that they did not even have a license to conduct tourism business. When the business was privatized in 1991, the only officially authorized tour operator was the private sector monopoly - Bhutan Tourism Corporation Limited (BTCL). Other operators were categorized as sub-contractors, without the right to operate tours independently. That situation changed - after the government relented and a total of 33 tour operators came into being.
Along with a cap on licenses at 33, knowingly or unknowingly, the government discouraged competition by keeping the license fee very high. When the cap of 33 was in force, the license fee was as following:
1. Registration Fee Nu. 1,000.00
2. Annual License Fee Nu. 25,000.00
3. Security Deposit Nu. 100,000.00
TOTAL. Nu. 126,000.00
The security deposit requirement was done away with, in 2000 that resulted in a surge in numbers of licenses issued - from 33 in the 1990’s, to 116 by 2001.
Minimum Daily Tariff
The steady growth of the tourism industry in Bhutan should be credited to the sound policy of “High-Value Low-Volume” adopted from day one of the start of tourism business in the country. It helped keep away the backpacking variety of tourists, while ensuring that there was no pressure on the environment. The policy was also intended to prevent cultural dilution. Few may recall that those days when Bhutan embarked on the journey of tourism, the Hippie culture was overwhelming neighboring Nepal.
The High-Value Low-Volume policy when initially adopted was intended to keep the “volume low” through high tariff imposition. More recently, this policy has been rephrased to read “High-Value Low-Impact”. While the government has been truly imaginative in rewording the policy to suite the changing needs, it has failed to be equally imaginative - in preparing for the “high volume” inflow of “low impact” tourists. Other than the unregulated burgeoning of hotel rooms, the country’s carrying capacity in other areas is totally mismatched.
The Minimum Daily Tariff was fixed at the following rates:
1974 US$130.00 per person per night halt
1989 US$ 200.00 per person per night halt
2012 US$250.00 per person per night halt
It is remarkable that in the last 45 years, there have been only two tariff changes.
Visa Application Process
THERE WAS NONE - because those days Bhutan did not have a system of issuing Visas. However, since the tourists had to enter Bhutan overland through the restricted Indian territory of West Bengal, the DoT/BTC had to obtain a Restricted Area Permit called “Innerline Permit”. This was issued from New Delhi. This was a real problem and took anywhere up to six months to obtain.
The process of clearing the Innerline Permit from New Delhi was tedious because those heady days there was no Internet, no Fax machines, no Telex or Telegram. The information had to be conveyed to the Royal Bhutanese Embassy in New Delhi - over the Wireless sets - in Morse codes. The clearance of the Innerline Permits was also relayed over wireless. Much later, Telegrams and Telex communications came into being.
During the early days, most often, tour payments used to be received in CASH. After few years, bank drafts were used, including depositing into the Bank of Bhutan’s bank accounts in select Indian cities.
Dominic Sitling remembers that he had to make regular trips to Bombay, Calcutta and New Delhi, to collect outstanding tour payments from tour agents.
All tour payments were deposited with the Ministry of Finance. The DoT/BTC was given annual budgets to cover their administrative costs and to pay for expenses to host tourists.
The first year of start of tourism in Bhutan (1974) saw a number of 274 tourist arrivals. By end 2001, the number had shot up to 6,393 arrivals.
Number of Tour Guides
There were 10 tour guides in 1974. The number, as of today, stands at 4,335.
Total Number of Tour Operators
In 1974 when the tourism business started, there was only one unlicensed tour operator. As of this year, the number of tour operation licenses registered with the TCB stands at around 2,700.
Tourism is among Bhutan’s most vital industries - even more vital than hydropower, as it stands now. Unlike hydropower, tourism is a net gain industry - there are no loans to service and no punishing interests to be paid to foreign governments. It is the biggest employer - many, many folds more than the hydropower. Its benefit is accrued across the whole spectrum of the Bhutanese society - pony drivers, vegetable vendors, farmers, vehicle owners, hoteliers, guides, drivers, shop owners, restauranteurs, weavers, Thanka painters etc.
But this industry is now in danger of being besieged with a multiple of problems - the most damaging with serious long-term implications being the emergence of FRONTING. Surprisingly, this is barely spoken about. Undercutting is another - but this is a malice that will be difficult to control, for the simple reason that in most cases, it cannot be proven.
The root cause of most of the above problems is: poor regulation and enforcement by the regulator: Tourism Council of Bhutan. Undercutting happens because the business is unregulated. Bad debt happens because there is poor regulation. Poor service delivery happens because there is no regulation. Guides don’t wear their badges even when required by rules, because there is no regulation. The rampant incidences of accommodating tourists in unauthorized accommodations happen because there is poor regulation.
The Tourism Council and the government talk of billions of ngulturns to do flagships and starships, and yet the regulatory authority that oversees an industry that generates millions of dollars laments that they do not have money to induct 10-20 inspectors to improve the system. It is for this reason that I adamantly refuse to blog on the matter relating to removal of Zhemgang from the tourism flagship program. It will not matter in the least bit.
But now there is another elephant in the room - the tendency to be confused between the need to control, as opposed to the need to regulate. The crushing numbers of the regional tourists is causing some to be very jumpy, unduly.
It is time that we bring to focus our new mantra - “High Value Low Impact” tourism. I do not believe that the need to tweak the original mantra was because there was a need to curtail volume. I think the collective aspiration was to keep increasing the volume, while ensuring that there is the least bit of impact on the environment, our living spaces, on our road network, parking spaces, and cultural and religious sites. Today the reality is that the carrying capacity has not kept pace with the progress of the industry, other than the hotel industry. In rest of the service chain, there is complete mismatch. Look at our domestic airports - it is shameful and dangerous - they are not equipped with Bowsers. The national flag carrier has completely deviated from its principal responsibility. Today it is coerced into exacting a heavy cost on the tourism industry. They have lost track of the reason why they are the national flag carrier.
Our problem is that we are forever stuck at talking - it is time that we graduate to doing. We have screwed up our hydropower policy – lets not do it with tourism.
Today regional tourism is a topic that is flogged at every occasion. I wonder if there is another way of looking at it? Say, as an opportunity? Isn’t it possible that we could come up with ways and means whereby neither the snake is killed, nor the stick is broken?
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