The small Buddhist kingdom of Bhutan on the eastern edge of the Himalayas, often referred to as “the last Shangri-La” for its abundance of natural beauty, sustainable development and rich cultural heritage, has long resisted the rapid financial returns of mass tourism in advocate of conservation. The approach is aligned with a cultural philosophy that focuses on the wealth and prosperity of the country measured, by means of a national happiness indexas an alternative to gross domestic product.
Since 1974, the year foreigners were allowed to visit Bhutan for the first time, the country has had a unique “high quality, low volume” tourism policy, requiring international visitors to pay at least a $250 daily rate for lodging, meals, a mandatory guidebook, and including a $65 “sustainable development fee” to the government. The package-style approach focused on preserving the country’s natural resources by limiting the number of international visitors and controlling where they went. While some tourists complained about poor sanitation in the hotel, slow internet access and tasteless food, many appreciated the convenience of the pre-arranged tours.
As the Bhutan government prepares to reopen its borders on September 23, it has overhauled the tourism system and significantly increased the cost of visiting. Visitors no longer need to take a package tour, but they now have to pay a daily fee of $200 directly to the government and pay separately for their lodging, meals, tours and other travel expenses. The new policy, officials say, will rebrand Bhutan as “an exclusive destination” and attract “demanding tourists” who will have access to a wider range of higher quality services.
“Covid-19 has enabled us to reset, to rethink how best to structure and manage the sector so that it not only benefits Bhutan economically, but also socially, while keeping its carbon footprint low,” said Dr. Tandi Dorji, Bhutan’s Foreign Minister and Chairman of the Tourism Council of Bhutan. “In the long run, our goal is to create high-quality visitor experiences and high-paying and professional jobs for our citizens. †
But many tour operators are concerned about the change. They fear the new structure will leave them out of business – unsure whether they will be able to attract a sufficient number of tourists with the higher fee, or whether tourists will need their services at all now that they have the have the possibility to book directly through hotels, guides and the like.
“Just when we thought we saw the light at the end of the tunnel after going bankrupt for two and a half years, the government’s tourism amendment bill has thrown us in the dark again and we have no idea how we go about it,” said Pelden Dorji, the chief executive officer of the Bhutan Travel Club, a company specializing in adventure travel experiences.
Mr Dorji has already received cancellations from groups that had booked, but unpaid, package tours that they had scheduled later in the year. He said the group members felt they could not justify paying another $200 per day on top of the other expenses agreed to as part of the previous package.
‘Deep love and respect for nature’
Under the previous policy, all bookings and payments had to be made through registered local tour operators, who had to organize a pre-arranged itinerary with fixed dates and overnight stays.
“It’s basically a package tour that allows you to see an authentic, untouched corner of paradise while protecting yourself from tourist invasion,” said Megan Petersen, 44, a London-based makeup artist who visited Bhutan in 2017. “It’s genius and places with overtourism problems should use the same model.”
Ms. Petersen spent eight days exploring Bhutan with her sister, trekking through forests and mountain meadows, hiking to cliff-top temples and meeting local communities in remote villages. During their journey, they camped and stayed in simple three-star accommodations. Everything was in their package.
“The lodges and food were pretty average, but that just added to the experience of being able to experience the real community and culture without the fake tourist treatment,” said Ms Petersen. “What makes Bhutan so special is the kindness and spirituality of the people and their deep love and respect for nature and their land.”
Government officials say the previous policy discouraged additional out-of-pocket spending as many travel agents would pool their travel activities, food and other offerings so as not to exceed the $250 daily rate — the practice turned the policy’s minimum rate into the maximum.
“The policy caused more misunderstanding than understanding and it has led to a reduction in the services we may be able to provide,” Prime Minister Lotay Tshering said.
Under the revised Tourism Act passed by the Bhutanese Parliament last month, Bhutan will be able to reinvest “in raising the quality of tourism products, especially in terms of training our guides, improving the quality of our hotels, restaurants and food, preserving the pristine environment we have for generations to come,” the prime minister said.
One of the government’s top priorities, said Dr. Tshering, is to invest in waste management infrastructure and to protect Bhutan’s biological corridors, wildlife parks and key cultural assets. Bhutan’s constitution requires 60 percent of the land to be forested and enforces strict laws to protect and maintain carbon negative status.
“This all costs money,” said Dr. tshering.
“Why fix something that isn’t broken?”
While Bhutanese travel representatives had expected some reforms to the country’s tourism policy, the government’s threefold increase in its sustainability tax came as a shock, with many fearing the new model will lead tourists to cheaper destinations at a time when the country is desperately seeking is to tourism dollar to boost recovery after the pandemic.
Tourism revenues are a major contributor to Bhutan’s economy, making up 6 percent of the country’s gross domestic product. About 29,000 tourists visited Bhutan in 2020 before the borders closed in March of that year, generating revenue of $19 million. In 2019, 315,599 tourists visited, making the tourism industry $225 million, according to the Tourism Council of Bhutan. The kingdom eased its travel restrictions earlier this year, allowing foreign visitors to be admitted on a case-by-case basis and quarantining them.
Tourism operators argue that the minimum package framework incentivized tourists by including all essential services.
“Everyone wonders, ‘why fix something that isn’t broken?’” said Lotay Rinchen, co-founder of the tourism company Bridge to Bhutan, Tailor-Made Mindful Travel† It “protected the travel industry and ensured a certain level of quality and business,” he said of the earlier system.
Mr Rinchen was always in favor of increasing the minimum remuneration. But without the package structure requirement, he says he expects the Bhutan brand to be harder to sell. He has started exploring the possibility of offering luxury products to lure tourists willing to pay the higher costs, such as chic boutique lodges, wellness retreats and luxury glamping. Previously, tourists could pay extra for luxury hotels such as the Tag Tashi and Le Meridien Thimphubut many opted for the basic options included in the minimal daily fee package.
“Now is not the right time. Bhutan’s economy is in bad shape and we expected to open tourism and start earning hard currency again, but this price hike will keep tourists away,” said Mr Dorji of Bhutan Travel Club, adding that the new model would target a demographic of older tourists who would “skip from one luxury hotel to another, without experiencing the Bhutanese way of life.”
The prime minister said that was not the government’s intention. “We want to make sure we get a range of tourists who are intellectually skilled, knowledgeable and aware of our needs and unique characteristics,” he said.
Elsa Foster, 44, an American personal trainer living in Scotland, went on a mountain bike ride in Bhutan in 2018 with a group of friends. After a day of sightseeing in Bhutan’s capital, Thimphu, they embarked on a seven-day off-road tour adventure, cycling through remote mountain valleys and villages. Ms Foster said it was very practical to have hotels booked through their travel agent as they stayed in a different location each night.
“I really liked how everything was organized and packaged with the old compensation system, all you had to do was show up,” she said. “But to pay $200 on top of all other expenses, you have to be pretty rich and it’s a shame that Bhutan is becoming out of reach for young people who can’t afford it.”
The government hopes the new policy will have the opposite effect and attract a wider audience. “All we mean is to welcome with a very open heart all individuals and potential visitors who want to visit and experience the uniqueness we have to offer,” said Dr. tshering. “Then we ensure that the visitor gets the value of the money spent in Bhutan.”
The United States was one of the most important tourist markets for the kingdom before the pandemic, after India and Bangladesh, with 13,016 Americans visiting in 2019 and spending an average of 10 nights, according to the Tourism Council of Bhutan.
Karma Tshering, an environmental conservation and ecotourism specialist, said the government should use the increased tourist tax to meet its sustainability goals, which include investing in hiking trails, highway facilities and training and supporting service providers.
He is concerned that without the minimum spend policy, which “helps our service providers obtain minimum income to support their services, our people will be left in the hands of the tourists to negotiate and lower prices,” the statement said. Mr. Tshering, adding that there could be “a chain impact on delivering quality services and quality experiences.”
Some sectors see an opportunity in the change. Sonam Wangchuk, chairman of the Hotel & Restaurant Association of Bhutan, said the change is long overdue and will bring a positive change where all hotels and restaurants are given equal opportunities.
“I think now it’s the survival of the fittest, where you have to pull up your socks now and be a go-getter,” he said. “The old days of business knocking on your door are over, so the harder we work, the more promising it will be.”
Chencho Dema contributed to reporting from Kansas City, Mo.