Bhutanese Tourism Industry Under Attack: IV

I hear that the proponents of the “liberalization” are not only proposing doing away with the Minimum Daily Tariff but they are sweetening the deal - so they think - by proposing the increase of Royalty to US$ 100.00, from the current rate of US$ 65.00. They choose to propose increase in Royalty at a time when Bhutanese tour operators say that they are recording close to 30% drop in dollar paying tourist arrivals, caused by the devastation of Nepal by earthquake and the ongoing economic blockade that has brought tourism in that country to a standstill. Since Bhutan forms part of the Nepal tourism circuit, the effects are felt in Bhutan as well. Even worst, the road widening works between Thimphu and Bumthang is causing both physical and mental trauma to the tourists that is bound to result in even lower arrivals in the coming years. Bhutan’s tourism industry is destined for a severe depression and yet, our benign lawmakers are clueless about it. On the contrary, they propose a complete cataclysm in the industry.

That is the quality of some of our lawmakers! How long are we going to depend on divine providence to save our butts? The talk in town is that even the stalling of the ratification of the BBIN Transport Agreement by the National Assembly during this session was because of the intervention by our protecting deities - given the bizarre circumstances that lead to the bill’s nullification.

If the brood of lawmakers that are pushing for the lifting of the Minimum Daily Tariff have there way, one thing is certain: it will usher in an era of fronting in the tourism industry. So far this is among the few businesses where there is no incidence of fronting. The Royal Government of Bhutan has been trying to remove the malice of fronting since the late '70s, unsuccessfully.

The big players from outside the country will take over the business and the Bhutanese players will be edged out. In a way I think it may have already begun. I understand that one big player from the region has already placed their representative in Bhutan who manages all the business - including receiving their guests at Paro airport.

A time will come when there will be no rooms available for the dollar paying guests because the hotel owners and managers would have pre-sold their rooms to the regional players (at one third the price) who pay them millions in advance. Over time, these hotels will be bought off by these players and slowly they will monopolize the business. I know that the law of the land does not permit outsiders to own property in Bhutan but ACC reveals that some of the buildings in Phuentsholing have been sold to outsiders.

In the belief that the proposers of the lifting of the Minimum Daily Tariff do not understand the tourism trade, I would like to inform them that the tourism business is an organized business. One has to understand how and who generates tourist traffic to Bhutan.

Dago Bida of Etho Metho tells me that of the thousands of tourists that her company brings into Bhutan every year, less than hundred are individual enquiries. This means that the tourist traffic is generated by outside tour agents. Thus, the NC’s blue-eyed hotel owners still have to deal with agents - if not with the local ones – outside ones. However, the outside agents will prefer to deal with the local tour operators since hotel accommodation is only a small part of the overall logistical support the outside tour agents will need.

To some extent I do empathize with the hotel owners. I know of cases where the tour operators have not paid the hotels for years. This is not good for the industry. The hotels are an integral part of the success story of Bhutan’s tourism trade. The hotels must be paid in time so that they can provide better service and make improvements to their property. Thus, to me it seems like the thing to do is not go crying to the NC to devastate the tourism trade but to get their acts together and ensure that government provide them protection from the tyranny of the tour operators.

Asking for the lifting of the Minimum Daily Tariff will devastate the country, let alone the tourism industry, while not serving their interest. The hotel owners must ensure that they consider national interest above and beyond their personal greed. The country will be overwhelmed by the riffraff and all sorts of trouble will start.

Here is homework for those lawmakers who are pushing for “liberalization”:

Ask the tour operators: who brought in the Thai tourists under the “special Thai package” how much profit they made. In fact ask them: did you make profit at all?

Next, ask the Tax Department: how much tax was collected from the tour operators on the business/profit generated by them from the special Thai deal?

Ask the hotel owners: at what rate they sold their rooms to accommodate these visitors.

I hope the answers will convince you to desist from ruining a perfectly good thing that we have.

.................. to be continued