BHUTAN GOVERNMENT SAYS NO TO OVERNIGHT CHANGE IN TOURISM POLICY

January 4, 2016
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No haste in reforming tourism sector

The government will decide on the proposed changes in the tourism sector after studying the recommendations of the National Council, draft Economic Development Policy (EDP) and Tourism Council of Bhutan (TCB).

Economic affairs minister Norbu Wangchuk, at the meet-the-press session on 1st January, said the government would examine and get a comprehensive perspective after it has all the three recommendations.

“Firstly we need to see if there is a need for reform and if so, what is the path that we tread and the strategies that we would adopt,” lyonpo said, when asked about the government’s view on whether its time for a change in the tariff system as recommended by the Council and proposed in the draft EDP.

Lyonpo Norbu Wangchuk is also the vice chairman of the TCB.

He said it’s interesting that currently the tourism sector is looked at from three fronts referring to the Council, the EDP and the TCB’s review of tourism policy.

While the National Council probably focused on the tariff structure, lyonpo said a group of civil servants from the economic affairs ministry are working on the EDP.

“As part of the comprehensive EDP, they have also looked at how to revamp and reform the tourism sector where they have also included the tariff structure,” lyonpo said.

Most importantly, lyonpo said TCB with support of expertise from the World Bank is developing a comprehensive recommendation on the tourism strategies and policies as a whole that would capture the structure as well.

“The government would be much wiser with three different recommendations perhaps with some convergence,” lyonpo said. “We’ll entrust all the recommendations to the civil servants who would then give a reasoned judgment.”

Lyonpo said that essentially for the government, it works with relevant civil servants to whom all the recommendations would be entrusted.

“So until it comes to the Cabinet, we will not be able to take any decision,” lyonpo said, adding that right now the government has the Council’s and the EDP recommendations and that TCB recommendation is expected soon.

The National Council during its 16th session resolved to recommend the government to reform the “archaic tourism pricing mechanism by moving from the fixed minimum daily tariff system to a more transparent pricing system that provides tourists greater value for money and discourages the malpractice of undercutting and improves higher value tourism.”

“This recommendation would entail retaining or even increasing the royalty component (sustainable tourism fee) and requiring tourists to be routed through local tour operators and using local tour guides,” the resolution states.

Terming Bhutan as an exclusive tourist destination, the draft EDP states that tourists will no longer be required to come through a travel agency. Instead tourists are required to pay a sustainable development fee (royalty) and show the confirmations of guide, vehicle and hotel reservation, airline booking, and travel itinerary before they are issued visas.

The draft EDP states that tourists would be provided with visitors card at the point of entry that provides access to all historical, cultural and other tourist sites.  The value of the card will be equivalent to the visa fees and the sustainable development fee (SDF). The SDF shall be the sole mechanism to promote high value low impact tourism.

The draft EDP also states that TCB would set the SDF on a monthly basis at the beginning of the year to ensure distribution of the tourist inflow throughout the year and by region. The draft also recommends lower fees in the months when the tourist arrivals are low and higher fees during peak season.

For tourists staying longer than 10 days, lower fees would be levied and a discount on SDF would be offered for repeat visitors from their second visit. However, the government can exempt or lower the SDF to visitors from select countries during lean seasons for a fixed duration.

Source: Kuensel (Kinga Dema)

BHUTAN IN THE RISK OF LOOSING IT’S UNIQUE TOURISM POLICY

December 4, 2015
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DON’T KILL THE GOOSE THAT LAYS THE GOLDEN EGGS

This is in response to the National Council’s recent recommendation on the liberalization of the daily tourism tariff.

The fact that there has been a steady increase in the number of new tour operators over the years, from a mere single digit in the 1970’s to about 1,700 hundred tour operators today, shows the present tourism policy was never confined to a select few.

Four years ago, I along with my six friends was out of job and exploring business ideas. The tourism policy and regulations were so conducive and protective that we all went into the tourism business. Thanks to the “high value low impact policy” it not only benefited the country but us too, being new in the market with no capital and only with some researched data in hand. The tourism industry was never confined to few but was open for all interested and each had their share of the pie depending on their hard work and quality of services delivered.

Now, how certain are we and from which angle does one get the assurance that if the daily tourism tariff is liberalized, the number of tourists visiting Bhutan will fairly be distributed amongst all the 1,700 tour operators? If this is not a personal assumption then there must be a mathematical solution whereby the liberalization of the daily tariff will equate to fair distribution of tourist to all concerned parties.

And, even if this holistic fabulous approach succeeds, are we encouraging a healthy competition and creating a level playing field among the players in the market? Or will this make the well established few tour companies with their own fleet of cars and hotels all over the places take the edge over the middle and small/new tour companies by offering the lowest price to the tourists? With the price into play and a consumer’s basic instinct to go for the lowest price, will this not knock out the middle and small/new tour companies off the tourism industry for good?

The more danger also lies in the background, which is even bleaker. Let us not forget our country getting run down by mass tourism with negative impact on the environment and community. Let us also consider the frightening impact it will have on our fragile youth as a result of cheap tourism and influx of poor quality tourists. Can we afford to turn a blind eye on the negative impacts of this liberalization?

Similar concerns were shared by all of the people I met and they also voiced the same unease. While I appreciate the National Council’s Economic Affairs Committee and their initiative for equitable socio-economic development, such recommendations also makes me doubt a little on whether there are any vested interests based on the select people and those from the tourism industry who called and applauded the recommendations.

Let us not murder this highly prized tourism industry (even widely appreciated in the international market for its noble tourism policy) as a result of some good orators, just because they can make valid opinions to an apparently ‘doing very well, no change required’ situation. If we are to make any changes in the current policy, let us be practical and be fully convinced to apply for change in the larger interest of the country.

It is interesting to note that some of our learned and Honorable Members of the National Council are expecting to bear fruits after cutting down the tree from the roots. “When prices become competitive, tour operators will come up with many tourism products from various parts of the country, which would actually benefit areas not touched until now,” Zhemgang Councilor was quoted saying

If the prices were to play, I would rather focus on areas and products with less time and resources to bring down the cost. I would rather promote Thimphu and Paro only as there are many choices in hotels, especially regarding room rates, well developed infrastructure and avoid additional transportation cost. If I was to promote far flung areas like Lhuentshi and Zhemgang then the overall cost of the tour package will be high, whereas I can easily convince the tourists to spend their (already) limited time in Thimphu, Paro and the nearby regions.

Tourist actually come to experience the unique culture of Bhutan and I can easily promote remote villages of Thimphu, Paro, Haa, Punakha and Wangdue valleys as they also have a lot to offer in terms of traditional authentic Bhutan experience and its not as necessary to take them to the east or central parts of the country.

Having said that, until now, the price of the tour package (daily tariff) never interfered in the itineraries I designed for my guests. Depending on their time, my guests could visit all the places both near, far and remote, because I want my guests to experience and explore as many places as possible within their time frame since the prevailing daily tariff is more than enough to cover all of their expenses and more.

Now, if the liberalization of the daily tourism tariff comes through I may as well prepare myself for the oncoming war with other tour operators solely based on the prices.

However, on the other hand, if the liberalization does not come through and if we don’t need to compete with the prices, we can then think of competing in other ways.  One main focus can be in improving and diversification of various tourism products to attract and uphold Bhutan as a unique holiday destination.

I have been in the industry for the last four years. Since the daily tariff is fixed and regulated, my focus was on quality improvement and product diversification. Also since tourists are aware of this fixed daily tariff, there is no time lost in negotiating and haggling the costs! Instead we focus on creating a unique and quality experience worth the dollars.

I earnestly request all members of the Parliament to consider all concerns and the impact of such a recommendation, so that, such irreversible policy change will not kill the goose that lays the golden eggs.

Contributed by Sonam Dendup

BHUTAN NEEDS A COMPREHENSIVE TOURISM POLICY

November 24, 2015
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After a one-year long review of the tourism industry, the National Council’s Economic Affairs Committee called for an urgent need of a comprehensive tourism policy and recommended a revision of the tourism tariff.

These were among the seven recommendations deliberated in the House yesterday.

“Considering the significance of the sector and the exponential rise in tourist arrivals, it has become imperative to have a comprehensive policy to guide the sector including unregulated regional tourists,” the committee’s chairperson Pema Tenzin said.

Without a policy, the Bhutan Tourism Rules, schedules of tariff for international tourists 1995 and the Trekking in Bhutan Rules and Regulations 1996 regulate the sector today.

The committee also recommended to enforce a proper pricing mechanism.

Dagana Councillor Sonam Dorji said the tariffs were revised in January 2012 from USD 200 to 250 for peak season and from USD 165 to 200 for lean seasons and a royalty of USD 65 to the government.

“Given the competitiveness of the sector, the existence of multiple players in a fixed tariff system has led to predatory pricing among operators,” he said. “Hence the issue of undercutting which could undermine the core value proposition of Bhutan’s tourism which is to ensure high value and low impact.”

“While retaining the royalty component, the government could drop the tariff itself to ensure that the tourism system maximizes benefits and opportunities and minimizes tourism leakages,” Sonam Dorji said.

Other members also said that the fixed tariff caused wrong marketing and awareness with the misunderstanding of all-inclusive nature of tariff.Since its inception in 1974, the country has followed a policy of ‘high value, low volume’ tourism, which kept it well regulated.

In 2009, the government announced the policy of ‘high value, low impact’ as part of its Accelerating Bhutan’s Socio-Economic Development initiative and set a target of 100,000 tourists a year by 2012 opening the country to regional tourists as well.

Until 2008, only 27,000 dollar paying tourists and 12,000 regional tourists visited the country. The number rose in 2014 to 133,480 tourists, the majority of which were regional tourists, 68,000. The government has pledged to increase tourist arrival to more than 200,000 by the end of this Plan.

The committee recommended focusing on quality and not just quantity.

“We must be mindful of the carrying capacity of our natural and cultural environment to deal with an influx of tourists that is about one third of our own population,” eminent member and a committee member Dasho Tashi Wangyel said.

He said the government should conduct a research to know the maximum carrying capacity of the tourism activities- both tangible and intangible.

A situational analysis found that benefits from tourism are not spread equally across the country. Although the government pledged to make 20 percent of tourists visit eastern dzongkhags, as of 2014 only 3.6 percent had arrived there.

The committee called the government to spread the benefits to these dzongkhags through more investment in infrastructure and transport sectors, strengthen coordination among agencies, involving local leaders in identifying local tourism products and diversify tourism products.

Pemagatshel Councillor Jigme Rinzin said for instance, Pemagatshel could offer trekking around the place with the route connecting historic places such as temples in the dzongkhag.

Samdrupjongkhar Councillor Jigme Wangchuk said the southern dzongkhags such as Sarpang, Samtse and Samdrupjongkhar should be opened for tourists.

“The security threats have ended in 2003, and these places have ready entry and exits points which would serve as an advantage,” he said.

Without a regulation, regional tourists the review report states were involved in unfortunate incidents including deaths, and other avoidable problems. The committee called for measures to improve travel and experience for regional tourists and avert problems.

The review also asked the government to develop tourism and hospitality professionals by providing more scholarships to fill the shortage of professionals in the industry such as professional guides and qualified employees.

It also found the need for the government to work on a system and procedures for taxation and reporting of earnings from the sector.

National Council will continue its deliberations on the industry today.

SOURCE: KUENSEL (Tshering Palden)