BHUTANESE TOUR GUIDES SAY NO TO TOURISTS’ TARIFF LIBERALISATION

December 25, 2015
, , , , Articles on Bhutan, News on Bhutan

guides

Guides against tariff liberalization

A majority of about 100 guides who attended a discussion on issues and challenges in the guiding profession yesterday wanted the current system including the tariff to remain the same.

The Guides Association of Bhutan (GAB) organized the meeting to discuss the National Council’s recommendations on tourism particularly the tariff liberalization, standardization, daily allowance and training opportunities for guides, among others.

Discussions on tariff dominated the forum and despite requests to take turns, all guides spoke at the same time.

GAB chairman Garab Dorji said that, personally, he felt it was time for some reform in the industry to bring about healthy competition in the market.

Last year’s international tourist arrivals of 58,022, he said translates to 12,000 groups. “This means that each guide, on an average catered to about four groups,” he said.

This indicates that a guide was employed only for a month, he said, which means guides are unemployed going by the labour force definition of employed. “It becomes a part time job,” he said.

GAB’s former executive director Sangay Phurba who is now a trainer said while it would be easy to liberalize, the reality would be different. If the issue was about undercutting, he said the government gets its taxes and royalty. “Technically, there is no undercutting,” he said, adding there are few cases but that’s business. “How sure are we to be employed if liberalized?”

A specialized guide Dr Norbu Wangchuk said he was for liberalization, as the country’s economy did not benefit much in the current system. “The overseas travel agents sell Bhutan for USD 500 to 600 but the money doesn’t enter our economy,” he said.

With liberalization, he said regional tourists would balance the tariff paying tourists. “Going by the increase in regional tourists, it won’t be long before the unregulated regional tourists overtake international tourists,” he said, emphasizing the existing issues of regional tourists.

If liberalized, he said that GAB could take the lead role in categorizing guides based on experience and market.

The guides agreed on the need to set a minimum base rate for guides based on which tour operators could “top up” depending on a guide’s expertise. The guides also requested that they be paid as per the clientele, specialization and experience.

Guides are paid Nu 500 to Nu 1,500 a day during peak season while during lean seasons they earn about Nu 500 to 1,000.

Guides said they have been paid the same amount since they joined the industry and the limited allowance was not enough to cover food and accommodation, unless its provided for free.

A guide said the government proudly claims that the unemployment rate has been reduced when the reality is different. He said the labour ministry must step in to address the issue of freelancing by providing stipend until they are permanently employed.

The issue of unregulated regional tourists and lack of training opportunities for guides to enhance their skills also came up for discussion.

Senior guides said there were training opportunities for guides until 2000 after which it was done away with. Guides also agreed to propose authorities to ensure that all regional tourists avail guides.

With about 640 guides entering the industry every year, a guide said it was a concern while another suggested that training institutes stop producing more guides so as not to affect employment opportunities. “Currently, guides are produced like chips from a factory,” a guide said.

Sangay Phurba said just because there are unemployed graduates or trained teacher today don’t mean that the colleges close shop. “This is not how it works, it’s a free market and the same applies to the rest of us,” he said.

There are more than 2,700 licensed guides today.

SOURCE: KUENSEL

BHUTAN TOURISM STAKEHOLDER REMAIN DIVIDED FOR CHANGE IN POLICY

December 21, 2015
, , , , , , , , , , Articles on Bhutan, News on Bhutan

tourisim-in-bhutan

The cost of maximizing tourism benefits

The National Council’s proposed changes in the tourism industry have left the industry divided.

Tour operators are against any reform in the existing tariff or policy while the guides and hoteliers welcome it.

The EAC recommended the government to retain the royalty of USD 65 a day a tourist and lift the tariff to ensure all stakeholders maximize tourism opportunities and minimize revenue leakages.

The EAC’s chairperson and Chukha’s councilor, Pema Tenzin said that the government reviews the Council’s recommendations for its practicality and provides a follow up report on its status.

The players

The tourism industry is governed by the “high value, low impact” policy. All tariff-paying tourists have to route through tour operators. They design the itinerary for tourists, chose hotels and assign a guide and transportation. Tourists who opt to stay in their preferred choice of hotels have to bear the surcharge. Of about 1,700 tour operators, only about 400 are operational. The top 10 tour operators bring in about 30 percent of the total international tourists.

There are about 133 hotels across the country with the highest located in Thimphu, Paro and Punakha. The occupancy rate is about 30 to 35 percent on an average for hotels in the western region, about 17 percent in central and seven percent in the eastern region.

There are about 2,500 licensed guides of which a majority are cultural guides. They are paid about Nu 500 to Nu 1,500 a day during peak season while in the lean season they get about Nu 500 to 1,000.

Today, small vehicles hired for tourists are paid Nu 18 to 21 a km while coaster busses categorized as medium vehicles get about Nu 30 to 35.

Issues 

The prominent issues confronting the industry today are hotel occupancy, equal spread of tourism benefits, seasonality and the alleged undercutting practices. The sector has been grappling with these issues for more than four decades.

Questions are also raised on how effective the Tourism Council of Bhutan’s (TCB) and tour operators marketing strategies are. Lack of innovation among tour operators is another issue. A majority of tour operators still sell the same tour packages and every year cultural tourists top the list of arrivals while less than 10 percent visit for adventure tour. Other products such as Buddhism, wellness and spa or biking, community based tourism and retreat are yet to pick up.

Unregulated regional tourist arrivals, which is increasing is seen as a threat to the country’s brand as a niche destination. Until a couple of years ago, regional tourists were not part of the tourism statistics but now the numbers are used as a yardstick for achieving targets.

Hoteliers’ and guides’ stand

Hoteliers and most guides laud the Council’s recommendation on doing away with the fixed tariff. The proposed change, they said would tackle the regional spread of tourism benefits and the seasonality issue. They said in the current system, tour operators decide where guests stay, what they do, eat or visit. The profit from tourism is not distributed within the industry, as tour operators want the lowest price for transportation, hotel, and guides.

Reasoning that hoteliers make the most investment in the industry and create the highest employment, they said its time tour operators promote Bhutan as a niche market instead of undercutting. They said the current system worked only in the past when there were fewer hotels, guides and tour operators.

Three-star hoteliers said they sell a room for about Nu 1,500 to 2,000 a night after offering 30 to 40 percent discount and removing all facilities in a bid to save costs.

“Although there is a huge scope, most hotels are unable to break even,” a hotelier and tour operator in Paro said.

In the current system, hoteliers and guides said that if they don’t have good relations with tour operators, they don’t get business. “Even if a tourist chooses your hotel, the tour operator would tell them that the rooms are booked and move them to another.”

Hoteliers said that the existing system has forced guides to depend on commission and take guests to the shops and hotels, depending on who provides them the highest commission besides demanding free food and lodge from hotels where tour operators keep their guests.

Guides Association of Bhutan’s (GAB) chairman Garab Dorji said the whole issue boils down to undercutting, which he said is rampant. “After offering a huge discount to overseas agents, the discount is pushed onto hotels and guides,” he said. “Hotels and guides don’t have a choice but to accept it as its better to have some guests than none.”

“The proposed changes will level the field for all where everyone gets equal chance,” Garab Dorji said.

It is alleged that most tour operators especially the bigger players sell tour packages for USD 130 to 170 a day.

Hotels and Restaurants Association of Bhutan’s (HRAB) president Thinley Palden Dorji said there is no denying that there is a problem.

“There is an issue with the way the industry is structured,” he said, calling for reform for the long-term health of the industry. “What makes the situation worse is that many hotels don’t receive their payment on time.”

Tour Operators’ take

Tour operators contend that not all undercut. They insist that any reform in the policy would affect the industry and Bhutan as a destination. Their argument is mainly based on “why fix something that is not broken” and that any change would mean, “killing the golden goose.”

Tour operators argue that if changes come through, it would mean undercutting is legalized. The increase in tourists, they said would promote mass tourism considering the tourist population ratio.

“The carrying capacity in terms of services and infrastructure need to be studied well,” a tour operator said, adding that any reform would add pressure on the limited resources.

Some tour operators attributed undercutting to management lapses, which they said would worsen if the existing tariff were removed.

“It’s not true that tour operators dictate the market. Not anymore,” one said. “It used to function that way in the 90s where information was solely dependent on tour operators but today hoteliers market themselves while clients seek information online prior to their visits.”

They said that although the price or tariff is just one component of the overall aspect of tourism, it was different for Bhutan as the tariff is the only factor that has maintained the country’s policy of high value, low impact for the past 41 years.

“Instead of meddling with the tariff that has worked so well, its time we come up with a proper plan and system in place,” Association of Bhutanese Tour Operators’ (ABTO) executive director Sonam Dorje said.

Citing that there are bigger issues that need to be tackled, Sonam Dorje said that tour operators are not adverse to change but first quality, standardization and professionalism in the industry should be addressed.

“Lets put our house in order first and have the system in place and then talk about the price,” Sonam Dorje said.

Some tour operators also said there are no basic infrastructure in place currently to maximize from the increase in arrivals if the tariff was removed. They also questioned how the reform would guarantee regional spread of tourism benefits and address the seasonality and occupancy issue for hotels.

The change in tariff, a tour operator said would be the beginning of an end. “It’s not right to malign tour operators when there is nothing wrong with the policy,” he said. “Brand Bhutan wasn’t created overnight, it was a deliberate approach to economic development. The brand is immeasurable.”

Referring to the occupancy issue and bad debts of hotels, another tour operator said that it was not the government’s job to bail out failed businesses. “The realty is that if the tariff system is removed, another 100 hotels will come up again and the same issues will exist.”

Council’s stand

EAC chairperson Pema Tenzin said the Council was looking at maximizing the policy by removing the fixed tariff.

On the accusation from tour operators that they were not consulted, Pema Tenzin said the committee has done enough consultation even before the 15th session.

He said all members sought views on the issue during their constituency visits besides consulting TCB, ABTO, HRAB and GAB, among others. “There were guides, foreigners, and people from non-tourism sectors who wrote to us,” he said.

The Council’s stand, he said is to stop mass tourism and encourage high-end tourists and address the existing issues in the industry.

“The royalty will serve as the pricing mechanism to avoid budget tourists,” he said, while emphasizing the need to manage regional tourists stating that Bhutan cannot have two standards for tourists.  “Let the market decide,” he said.

Pema Tenzin also said that TCB, as the apex body, instead of stamping visas and calculating the daily tariff, have a bigger mandate.

On the possibility of tax evasion and revenue leakages given the poor monitoring system in place currently, Pema Tenzin said the government must ensure an aggressive taxation system.

Meanwhile, Drukair’s CEO Tandi Wangchuk said that although it’s difficult to take a stand at the moment, an increase in passengers would mean additional business for the airlines.

“As a carrier, we will be happy with any policy that ensures increase in tourist arrivals and throughout the year,” he said.

TCB officials did not want to comment.

Source: Kuensel (Kinga Dema)

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

December 4, 2015
, , , , , , , Articles on Bhutan, News on Bhutan

focuspointnov28

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

Trekking in Bhutan only on designated routs and campsites

October 20, 2015
, , , , , , , , Articles on Bhutan, News on Bhutan

Trekkings 230598

Tourism Council of Bhutan: Tour operators must use designated routes and campsites

In the wake of the recent controversy surrounding the Bumdra campsite above Taktshang in Paro, Tourism Council of Bhutan (TCB) officials clarified that the campsite is not among the approved trekking routes and campsites.

This means that tour operators cannot keep their guests at Bumdra campsite.

If tour operators are found using undesignated trekking routes and campsites, TCB officials said they would be penalised in line with the tourism regulations.

The tourism rules and regulations states that if tour operators are found using trekking routes and campsites that are not in the TCB’s published list, they will be slapped a fine of Nu 5,000 with a warning on the first instance. If caught again, tour operators will be penalised Nu 10,000 with a warning. On the third offense, the tour operator’s licence will be cancelled.

It was alleged that a permanent campsite was set up at Bumdra acquiring land on lease from the dratshang without following due processes. The company is also alleged to be charging exorbitant rates for the facilities at the campsite that was equipped with solar power and Internet connectivity.

TCB officials said the company providing trekking services at Bumdra is not registered with them. In such cases, officials said that tour operators will be answerable and not the service provider since tour operators and guides are under the TCB’s purview and not service providers.

TCB’s head of marketing and promotion division Damcho Rinzin said the list of trek routes and campsites are also reflected in the Tashel online system where tour operators must identify the names of campsites if tourists are going camping or trekking.

“All tour operators must be aware of the designated trekking routes and campsites,” he said, adding that the same applies for accommodation. “It is mandatory that all tourists are kept in tourist standard accommodation.”

Records with TCB show about 34 designated trekking routes and campsites across the country. There are about 57 TCB certified farm stays in the country with the highest in Wangduephodrang at 24. There are about 123 tourist standard hotels in the country.

Although known for its environment, Bhutan is rather seen as a cultural destination and comparatively receives less number of trekking tourists every year. Trekking in Bhutan is part of nature-based tourism activity with treks varying from one to 40 nights.

In 2014, trekking tourists constituted about 13 percent of the total international arrivals records with TCB show. About 68,081 international tourists visited Bhutan last year.

Trekking tourists increased in 2010 and 2011 after which it started to decline. In 2010, the country recorded 2,753 trekking tourists, which increased to 3,402 in 2011. However, it dropped to 3,165 in 2012 while in 2013 only about 2,943 of the total international arrivals were for trekking.

Tour operators said most tourists complained that trekking in Bhutan was not worth what they paid for given the garbage filled trails and lack of infrastructure or development along the routes.

Despite the same minimum daily tariff of USD 250 and 200 during the peak and lean season for both cultural and trekking tourists, tour operators said it was easier to sell cultural tour packages.

Contributed by Kuensel (Kinga Dema)