Business and Pleasure
Tourism is the name of the game in modern, business-conscious Bhutan.
Tourism became a major industry in Bhutan in the midseventies, founded on the principle of sustainability in terms of environmentally friendly, culturally acceptable, and economically feasible. Bhutan’s unique culture is based on its tourism industry. The government is deeply aware of protecting the country's environment, values and cultural traditions by promoting tourism in line with its vision of Gross National Happiness (GNH). Tourism in Bhutan, as such, started with the objective to generate income as well as increase the
living standard of the people.
Bhutan’s tourism policy of “high value, low impact” has helped the country safeguard its rich living culture. In the absence of regulations on travel, tourist influx in the Kingdom has resulted in a negative environmental impact on Bhutan’s unique culture and unspoiled nature of inner parts of the country. Preferring higher quality tourism, the number of tourist is maintained at a manageable level, and is exercised through a tourism policy of government regulated tourist tariff.
Only a decade ago, some hundreds of tourists visited the Kingdom, at a fixed tariff of USD 150 per day. Considering the tourist influx from all walks of life, the fee was revised in 2012 to USD 200 per day for lean seasons and USD 250 per day for peak seasons, inclusive of a sustainable development fee (SDF) or royalty of USD 65 to the government. This is used towards the country’s free health care, education and building of tourism infrastructure.
Bhutan’s tourism industry is flourishing at a fast pace, contributing to the economy in terms of GNH. Till now the tourism sector has provided employment to 28,000 people. In 2014, a little over 100,000 tourists visited the Kingdom, which helped generate an income of Nu. 73 mn. Interestingly, the income generation from the tourism industry comes next to the hydropower project income.
In the last three years, Bhutan has seen an unprecedented growth in the number of international tariff paying and informal regional tourists mainly Indian; which undoubtedly has earned millions of dollars revenue for the country. Bhutan’s sustainability as a top tourist destination is its exclusivity, which is largely defined by the current daily tariff policy. However, the government reviews the tourism policy only, after carefully analyzing if it would add benefits in line with the socio-economic development of the nation.
A good example is the ‘high value and low volume,’ tourism policy which has been the guiding principle developing the tourism industry in Bhutan to ensure the preservation of its environment, culture and value system. The importance of this principle is recognized by the Indian government, but when it comes to applying it, most of the business agents focus more on international tourists than on regional tourists – resulting in violation of tourism rules and regulations. This is on account of all visitors who require a visa, other than regional Indian, Maldivian and Bangladeshi nationals who do not. Similarly, International tourists are guided by certified guides, who follow proper discipline, while regional tourists have direct access to the inner parts of Bhutan on their own and often hurt the sentiments of the locals by undisciplined acts, such as visiting temples in improper dress.
A case in point, the enormous opportunities in the marketing of ecotourism products shifted the overriding principle to ‘ High value, low impact.’ In the absence of the Tourism Act, it has its limitations for not eliminating the root cause of many issues the tourism industry is currently facing, such as the practice of undercutting tariff, seasonality problems, unregulated regional tourism, uneven distribution of tourism benefits and so on. The Bhutanese can travel freely in India, but Bhutan does recognize the impact from the increasing number of regional tourists, so it has reached a point where some measures need to be taken.
Bhutan’s geo-political situation has been considerably upgraded owing to India, which is Bhutan’s most important trade and development partner. There is no denying that the economy of Bhutan is dependent on India for financial assistance and migrant laborers for development projects, especially for road construction. But each economic program takes into account the government's desire to protect the country's environment and cultural traditions.
Bhutan's hydropower potential and its attraction for tourists are key resources. The Bhutanese economy is overly dependent on hydropower, whose exports account for some 45 percent of government revenues. Another 25 percent contribution to the GDP comes form of hydropower infrastructure construction. Most development projects, such as road construction, rely on Indian migrant labor. Given the high capital investment and low employment opportunities of this sector, the Government is providing incentives for controlled expansion of tourism, and tourismrelated services. The sustainability of the tourism industry is at stake and often compromised when travellers engage in wanton acts. Hence, the government encourages visits by environmentallyconscientious tourists.
Reviewing the tourism policy, an alternate can be to increase the daily minimum tariff, while regulating regional tourists. In that case, an SDF will also be set on a monthly basis at the beginning of each year to ensure distribution of tourist inflow throughout the year and by region. But this may not be feasible taking into account uncertain policies as labour, trade, finance and industrial licensing continue to hamper foreign investment. Another alternate can be liberalizing the tourist quota, but it would attract unwelcome visitors into the country and that is not acceptable. The need to have a comprehensive tourism policy is such that focus is on quality rather than quantity, with equal benefits spread to other parts of Bhutan, regulation of regional tourism, enforcement of proper pricing mechanism and creation of gainful employment.
The Bhutanese government is considering tourist accessibility to eastern and southern Bhutan to avoid over-crowding in the west and central dzongkhags. Eastern Bhutan is as good as unexplored since only 3.6 percent tourists visited parts of eastern Bhutan in 2014. The government has pledged to increase tourist visits to 20 percent in the coming years, by increasing tourism in areas like Samdrupjongkhar, Samtse and Sarpang. With this plan the government needs to address concerns over the need of basic civic amenities, promotion of historical places and opening trek routes to tourism. In addition, the government has proposed to develop incentives to promote and encourage repeat visitors with a target to achieve 10 percent repeat visitors within five years. Druk Air’s “My Happiness Reward,” a frequent flyer program is to encourage visitors to travel on the airline and attract repeat visits. Druk Air is the only national airline, and is now serviced by Bhutan Airlines and more domestic routes are to be covered by both the airlines in the near future.
From the very beginning, the Bhutanese hospitality industry was designed to cater to western highend tourists. Until recently, the need to meet the demand created by flourishing regional tourism is foremost. The contribution of tourism, the largest source of hard currency earning for the country, is the development of cross border tourism, an important priority for Bhutan to attract investment opportunities for building a smart infrastructure and providing basic facilities for the development of tourism. It goes without saying that opportunities in tourism and hydropower development will contribute to national, regional and local development plans within the framework of GNH.