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As the government aims to increase the number of tourists to an average of 300,000 per year, skepticism among tourism service providers is growing.
They believe that while the government benefits from the Sustainable Development Fee (SDF), the real profits are pocketed by overseas agents.
Travel agents say the advantage of overseas agents is that tourists can bypass local agents and apply for visas online.
Travel agents describe the current tourism in Puentsholing as chaotic like a fish market, with Indian tourists and guides haggling over prices. They attribute this to high fares charged by domestic airlines, forcing about 95% of tourists to travel via Bagdogra.
In addition, hotel prices in Bhutan are also determined by overseas agents. A hotel operator in Thimphu said that the current policy allows foreign companies to determine the quantity and quality of tourism. He said that some three-star hotels are forced to sell rooms at 800 Ngultrum per night, while the prices of four-star hotels have dropped to the level of three-star hotels.
“If the current rates continue, we will not be able to pay the EMIs (equal monthly instalments),” said a hotelier. Hoteliers have been accepting the rates offered by overseas agents to stay in business. They claim that the government’s lack of proper study has led to this situation.
One hotelier said that even if the government brings in 300,000 tourists, hoteliers will still not benefit because the prices are too low.
However, an official from the Ministry of Tourism said the government cannot control hotel prices, which must be determined by market dynamics. The official said hotels should focus on marketing and attract customers directly rather than through travel agencies.
Meanwhile, travel agencies are asking whether Bhutan has enough hotels to accommodate 300,000 tourists a year. Currently, the country has 184 three-star hotels, 15 four-star hotels and 20 five-star hotels. In addition, there are 117 one-star hotels and 55 two-star hotels.
Assuming an even distribution of the target number of 300,000 throughout the year, there will be 821 tourists arriving every day, requiring 410 rooms (assuming two people share a room). For example, if 821 tourists stay in Thimphu at the same time, they will need at least 40 hotels, as most hotels in Thimphu have a maximum of 40 rooms.
In addition, tour operators say the ministry is not effectively monitoring tourists, especially in Thimphu and Paro, and is even allowing taxi drivers to pick up tourists without guides. Commentators say trained tour guides are being taken away from jobs by taxi drivers.
On the other hand, it is understood that the tour guides have a busy job and earn a good income. A tour guide escorts a group of tourists from Puen Tsholing to Wangka Integrated Checkpoint until it is monitored. From the checkpoint, the tourists are released on their own. From there, the tour guide returns to Puen Tsholing to pick up another group of tourists. In this way, a tour guide can travel back and forth between Puen Tsholing and Wangka Checkpoint two or three times a day.
Travel agents say most have surrendered their licenses as the new tourism policy has caused a drop in business. Before the coronavirus outbreak, there were about 4,000 travel agencies in the country. Now, that number has dropped to 1,500.
“The tourists who withdrew are mainly targeting the Asian market, which has seen a decline in tourists due to inconsistent policies,” said a travel agency operator.
It is reported that a Chinese travel agency has terminated its cooperation with a local travel agency.
A transport ministry official said most travel agencies are not actively looking for new partners or differentiating themselves through specialized itineraries or products. “They are just waiting for business to come to them, which makes them vulnerable to pricing by international agents, especially those from nearby high-volume markets,” the official said.
Likewise, car owners said car rental prices have fallen. Due to agency relationships, some overseas agents own vehicles in the country and rent them out at cheaper prices, forcing local car owners to lower their prices.
Travel agencies claim that the country’s foreign exchange reserves are not growing because tourists deposit only SDF in banks and bring the rest in cash. Travel agencies encourage tourists to bring cash and then exchange it for cash at a higher rate on the black market.
As for Indian rupees, since most tourists come from Puntsholing, the operators of Jaigaon will exchange rupees into Ngultrum with tourists.
A travel agency operator said he had raised the issue with the government and predicted the consequences of the policy change, such as a sharp drop in foreign exchange inflows, rampant tax evasion, losses and difficulties for hotel operators, and a decline in service quality and tourist experience.
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