[ad_1]
In light of the recent discussions surrounding the future of Bhutan’s tourism industry, the Hotel and Restaurant Association of Bhutan (HRAB) would like to take an objective look at the industry and its future direction.
Current Industry Status
First, let’s put the current state of the industry in perspective. Since reopening in September 2022, we have experienced significant growth, with significant increases every quarter and every year. The first quarter of 2024 alone was up more than 100% over the same period in 2023, which shows that growth is strong. In addition, every month since the first quarter of 2024 has seen an increase in visitor numbers over the previous year. As we make positive changes in our industry, we expect growth to continue. 2024 may be recorded as the best year since the pandemic.
Have we recovered from the epidemic?
While these developments are encouraging, we must carefully and thoroughly assess our recovery from the pandemic, and to do so we need to compare our numbers with 2019. Despite commendable progress, our numbers are still below pre-pandemic levels, with 2023 figures accounting for only 32% of 2019 numbers and Q1 2024 figures accounting for 53% of 2019 numbers. Based on tourism data from countries in the region, recovery rates have reached 60-80% from pre-pandemic numbers, with very few countries fully recovered, exceeding 100%. Bhutan’s recovery rate is 32%. These numbers are clear: Bhutan’s journey to recovery from the pandemic, like many countries in the region, continues.
Undercut
Secondly, as many have said, one of the pressing challenges we face is price undercutting among service providers, and the root cause is low average occupancy rates. Due to the sharp decline in tourist arrivals (compared to 2019), coupled with a 54% increase in accommodation options, our hotels have been forced to slash prices to stay afloat. The fact is clear: on average, the supply of rooms is not in line with demand. However, the solution to this dilemma is not MDPR or deliberalization, but to increase tourist arrivals. Take the festive season in Thimphu and Paro, for example, where demand for accommodation soared and hotels were able to maintain or even increase their room rates. The lesson is clear: more tourists means healthier market dynamics for all, and by achieving higher average occupancy rates, hotels can maintain prices without having to cut them. More tourists also means more tax revenue for the government. Or, if there are fewer tourists and more accommodation facilities compared to 2019, the MDPR will only exacerbate the price undercutting. The most effective and quickest way to achieve higher tourist arrivals is for the entire industry (travel agencies, hotels, guides, airlines, government departments and other stakeholders) to work together on marketing, and this is only possible in a liberalized industry.
Liberalization and MDPR
Tourism is a collaborative ecosystem made up of farmers, taxi drivers, guides, hotels, tour operators, small businesses and countless other stakeholders who all benefit from a boom in tourism. It is only fair that the responsibility to promote this industry should be shared fairly by all stakeholders. This means that equal responsibility should be taken in promoting and owning the future of Bhutan’s tourism industry. When we discuss “stakeholders”, we often overlook one key group – the tourists! By liberalizing the industry and removing the MDPR, it achieves a key element: giving tourists the power to choose their service providers, promoting healthy competition based on service excellence, and providing them with a range of options to choose from.
Foreign capital inflow Currency and tax evasion
According to various newspaper reports, there has been an increase in foreign currency received through the SDF, but the issue of stagnant foreign exchange reserves is still under discussion. To boost foreign currency inflows, we should simplify the payment gateway and POS systems and focus on increasing the number of tourists. Bhutan already has the necessary platforms, but they lack consistent functionality. We need to encourage non-cash transactions within and outside Bhutan and simplify the payment gateway system to improve foreign currency inflows. This will also make tax payments more transparent.
Challenges and The way forward
We face many challenges in our industry, and this article cannot address them all. However, we can look to the future and work towards the following goals:
Tourism must be developed in all regions of Bhutan to diversify the tourism product. Currently, the focus is on only 5 regions (accounting for 91% of inbound tourists in 2019), resulting in a lack of diversity in the tourism industry. Improving air and road connectivity, simplifying payment systems, and promoting Bhutan as a year-round destination can attract more global tourists. Encouraging ambassadors in its markets and promoting special packages such as MICE, trekking, bird watching, and adventure can unlock untapped opportunities.
Given the growing global interest in Bhutan, stakeholders are missing out on opportunities due to a lack of online marketing knowledge. Hotels are the largest employer and need better tools and skills to deliver exceptional service. Tour guides are critical to the guest experience and need to improve their skills. Bhutan’s image as a sustainable destination conflicts with the state of roadside toilets, waste and garbage. A portion of the SDF needs to be reinvested to train stakeholders and address these challenges.
We implore each of you to reflect on our collective responsibility in guiding Bhutan’s tourism industry towards sustainable growth. Let us build on our strengths, rise to challenges, embrace innovation, and chart a brighter future for Bhutan’s tourism industry. We cannot fail. We must strive. We must have faith.
Contributors
Hotels and Restaurants Bhutan Association
[ad_2]
Source link
