revenue generated by tourism in bhutan

Tourism in Bhutan

Development of the tourism sector in bhutan from 1995 to 2020.

Revenues from tourism

All data for Bhutan in detail

Travel & Tourism - Bhutan

• In Bhutan, the revenue of the Travel & Tourism market is projected to reach US$9,140.00k by 2024.
• The market is expected to grow annually at a rate of 10.08%, resulting in a projected market volume of US$13,420.00k by 2028.
• The largest market in the market is the Package Holidays market, with a projected market volume of US$4,007.00k in 2024.
• By 2028, the number of users in the Package Holidays market is expected to amount to 40.29k users.
• In 2024, user penetration is expected to be 7.0% and is projected to hit 9.0% by 2028.
• The average revenue per user (ARPU) is expected to be US$164.00.
• By 2028, 76% of total revenue in the Travel & Tourism market will be generated through online sales.
• The United States will generate the most revenue in global comparison, with US$199bn in 2024.
• Bhutan's sustainable tourism policy, emphasizing on high-value, low-impact tourism, has attracted a niche market of mindful travelers.

Key regions: Malaysia , Europe , Singapore , Vietnam , United States

Definition:

The Travel & Tourism market encompasses a diverse range of accommodation services catering to the needs and preferences of travelers. This dynamic market includes package holidays, hotel accommodations, private vacation rentals, camping experiences, and cruises.

The market consists of five further markets.

• The Cruises market covers multi-day vacation trips on a cruise ship. The Cruises market encompasses exclusively passenger ticket revenues.
• The Vacation Rentals market comprises of private accommodation bookings which includes private holiday homes and houses as well as short-term rental of private rooms or flats.
• The Hotels market includes stays in hotels and professionally run guest houses.
• The Package Holidays market comprises of travel deals that normally contain travel and accommodation sold for one price, although optional further provisions can be included such as catering and tourist services.
• The Camping market includes bookings at camping sites for pitches using tents, campervans, or trailers. These can be associated with big chains or privately managed campsites.

Additional Information:

The main performance indicators of the Travel & Tourism market are revenues, average revenue per user (ARPU), users and user penetration rates. Additionally, online and offline sales channel shares display the distribution of online and offline bookings. The ARPU refers to the average revenue one user generates per year while the revenue represents the total booking volume. Revenues are generated through both online and offline sales channels and include exclusively B2C revenues and users for the above-mentioned markets. Users represent the aggregated number of guests. Each user is only counted once per year. Additional definitions for each market can be found within the respective market pages.

The booking volume includes all booked travels made by users from the selected region, independent of the departure and arrival. The scope includes domestic and outbound travel.

Prominent players in this sector include online travel agencies (OTAs) like Expedia and Opodo, as well as tour operators such as TUI. Specialized platforms like Hotels.com, Booking.com, and Airbnb facilitate the online booking of hotels and private accommodations, contributing significantly to the market's vibrancy.

For further information on the data displayed, refer to the info button right next to each box.

• Bookings directly via the website of the service provider, travel agencies, online travel agencies (OTAs) or telephone

out-of-scope

• Business trips
• Other forms of trips (e.g. excursions, etc.)

Travel & Tourism

• Vacation Rentals
• Package Holidays
• Analyst Opinion

Over the past few years, Bhutan has seen a steady growth in its Travel & Tourism market, with an increasing number of tourists visiting the country each year. Customer preferences: Tourists visiting Bhutan are increasingly looking for unique and authentic travel experiences, seeking to immerse themselves in the local culture and traditions. They are drawn to Bhutan's pristine natural landscapes, rich cultural heritage, and sustainable tourism practices. Additionally, there is a growing demand for adventure tourism activities such as trekking, hiking, and exploring Bhutan's remote regions. Trends in the market: One of the key trends in the Bhutanese Travel & Tourism market is the government's focus on high-value, low-impact tourism. This approach ensures that tourism development in Bhutan is sustainable and preserves the country's environment and culture. Furthermore, there is a rise in luxury tourism in Bhutan, with high-end accommodations and exclusive experiences catering to affluent travelers. The country is also witnessing an increase in niche tourism segments such as wellness tourism and spiritual retreats. Local special circumstances: Bhutan's unique policy of measuring Gross National Happiness (GNH) as a marker of progress sets it apart from other countries. This emphasis on holistic well-being and sustainable development aligns with the preferences of conscious travelers seeking meaningful experiences. The government's strict regulations on tourism, including the daily tariff for tourists and requirement of booking through authorized tour operators, help in controlling the number of visitors and maintaining the exclusivity of travel experiences in Bhutan. Underlying macroeconomic factors: The stable political environment in Bhutan, along with government initiatives to promote tourism as a key economic sector, has contributed to the growth of the Travel & Tourism market. Additionally, Bhutan's strategic location between India and China, two major emerging markets with growing outbound tourism, has increased the country's visibility as a unique travel destination. The improvement in infrastructure, such as the expansion of airports and roads, has also made it easier for tourists to access different parts of the country, further boosting the tourism sector.

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Additional notes:

• Sales Channels
• Travel Behavior
• Global Comparison
• Key Market Indicators

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Transforming the Economy Through Tourism

A High Value Low Impact Dilemma

For international tourists, Bhutan has long been a much sought after “global hotspot”, a rare destination. A veteran American tour operator who has been a promoter of high-end tours to Bhutan since the 1980s, now disagrees: “Bhutan used to be a high value, low impact destination,” he said, just back from Paro Taktsang in early December. “But not anymore.” If this is not quite a fact yet, it is a dire warning.

The second highest contributor to the national exchequer appears to have reached a crossroads: One way leads to exclusive cultural tours and spectacular treks, boutique hotels and traditional hospitality, the other to the ravages of mass tourism, like noise pollution, traffic jams, untended garbage and high stress.

Adding to the dilemma are “regional tourists” from India, Bangladesh, and Nepal, who outnumber “high end” international visitors, as the numbers increased to 254,704 in 2017. The regional influx is unplanned, with more Bhutanese cashing in on the trend every day and, in the process, threatening the balance of Bhutan’s “high value low impact” tourism policy.

The implication here is the tussle between Gross Domestic Product and Gross National Happiness. What measures must Bhutan take to prevent the destruction that challenges other niche destinations, in a world where a growing middle class is hungry for new destinations to explore? “Bhutan surprises me with its very progressive thinking on tourism,” said a recent visitor. “But if you let a million people in, you will destroy your environment, your culture. I hope you manage to keep mass tourism at bay.”

This article highlights the emerging threats and concerns facing an industry that earns the highest foreign exchange for the country. It emphasises the need for a concerted response and more integrated planning to maintain the balance of economic growth and a unique identity.

The Beginning

Bhutan opened its doors to tourism in 1974 with an image of exclusivity enhanced by its cautious high-yield tourism policy. The government charged USD 200/-to 250/-a day for foreign visitors, to control low spending, high impact tourists, or low spending tourists who tend to typically leave a higher carbon footprint with greater impact on the environment. This included a USD 65/-sustainable development fee (SDF) that goes directly to the government to support social welfare programmes.

This policy enabled the country to slowly open up to the world, set up services and regulate the flow of tourists into a landlocked kingdom where services and infrastructure were limited. This slow growth in tourism was necessary for several reasons. Bhutan is a small country with fewer than 750,000 people. Many of the country’s cultural festivals and spiritual places

• the essence of its identity — are small local events and sites that can be easily over-run by mass tourism. The pristine environment is recognised as a home to rare plant and animal species.

But “high value, low impact” is a loose policy that needs to be translated into a clear strategy and, more importantly, into action for an industry threatened by sheer numbers.

A Steady Growth

Tourism is Bhutan’s largest foreign exchange earner and second largest source of revenue after hydropower. In 2017, tourism revenue was USD 79.8 million (M), up from USD 73.7M in 2016. Tour operators, hotels, and affiliated tourism services earned USD 53.4M, up from USD 49.75M in 2016. This is a notable increase from the late 1980s when tourism contributed just over USD 2M to the government.

Statistics from the Tourism Council of Bhutan, the apex tourism organisation, show a steady growth in numbers. Arrivals increased by 35.1 percent in 2016 with 209,507 visitors. International visitors recorded a 35 percent increase over 2015 while regional visitors grew by 50 percent in the same period. 2017 saw a total of 254,704 visitors. International arrivals grew by 14.1 percent and regional tourists by 24.9 percent from 2016.

Graph 1: Tourism arrivals in Bhutan (TCB figures), 2008-2017

There are 3,100 licensed operators today but industry observers estimate that only about a quarter of them are active. Close to 2,500 guides have been licensed. Tourist class hotels have also grown from seven guest houses before 1991 to 53 international “tourist class” hotels and lodges offering 1,807 beds by 2002. By 2016, there was a total of 267 hotels with 10,278 beds for both foreign and regional tourists. 128 of them are in the 3 to 5 star category and above. Since 2016, an estimated 132 hotels (3-star and above) have been approved for development in Thimphu and Paro (TCB figures). Budget hotels, 2-star and below, are also increasing in numbers. Air BNB, a global online accommodation booking system, advertises about 70 or more Bhutanese properties that enable regional tourists to make direct bookings. Nearly half the regional tourists stay in budget hotels and the earnings from these stays are not available. Similarly, TCB surveys on regional tourists leaving Bhutan show that on average, about half the regional tourists surveyed individually spend about Nu 5,530/-apart from their normal travel costs 1 . This is a fraction of the total spendings of international visitors who represent a third of the total visitors.

Attractions and Access

Nineteen out of the 20 districts in Bhutan are open to tourists but the most popular destinations continue to be the districts of Thimphu, Paro, Punakha, Wangdue Phrodang, and Bumthang, where most of the budget hotels are being built. The remote districts have the same features that attract tourists but lack the management, organisation, resources and access.

Bhutan has opened 26 trekking routes across the country but two-thirds of them remain difficult to reach and need more facilities and services for high-end treks. Ironically, a part of the problem is the need for special travel permits that require cumbersome procedures. Industry specialists also point to the lack of regulations to govern the construction and occupancy of hotels, and the quality and safety of vehicles that are allowed into the country. Regional tourists without guides have even been spotted camping illegally in the forests. Regional tourists are exempted from the daily tariff, permitted to drive into Bhutan in Indian vehicles, and stay at non-certified hotels.

“We are vulnerable to crowds that will destroy our culture and environment,” says the chairperson of the Association of Bhutanese Tour Operators (ABTO), Rinzin Ongdrak, who acknowledges that Bhutan cannot afford to reduce the tariff or liberalise the industry to encourage mass tourism. ABTO has called for collaboration amongst stakeholders such as the Guides Association of Bhutan and the Hotel and Restaurants Association, and expects tourism arrivals to reach 500,000 by 2023.

But the numbers that do not pay the tariff are already threatening to edge out the high-end visitors. Aman Kora’s General Manager, John Reed, quotes agents in the United States as saying that Bhutan is no longer the idyllic and sought-after destination, but one that is prone to mass tourism. High-end operators agree.

Regional and International Tourists

The spiralling growth of regional tourists since 2015 has been straining the industry and adding pressure to liberalise tourism. Visitors from India, for example, represent 64.7 percent of tourists who came for leisure in 2016, and 72.7 percent of total arrivals in 2017. In 2017 just one third of tourists paid the tariff.

“All the regulations in Bhutan regulate the 70,000 international tourists, but there’s almost nothing to guide the regional tourists,” said Yeshey Norbu, proprietor of one of Bhutan’s top three travel agents, adding that this could edge out the international tariff paying tourists.

David Keen of Quo, a travel industry branding specialist and a regular visitor, says that the early 1990s policy, controlling tourist flow, enabled Bhutan to retain its dominant position as one of the most pristine, culturally and environmentally conscious nations on earth. “With the growth of regional traffic and incrementally affordable tourist flow, the environmental, social and cultural impact of huge tourism numbers will continue to erode both perception and the internal infrastructure of the nation,” says Keen.

Environmentalists like Karma Tshering also defend the fixed minimum pricing system. “The limited carrying capacity, due to the ecologically and culturally sensitive disposition of attractions and services, means we are already close to reaching our upper limits. Dismantling the pricing system will only mean achieving higher numbers at a faster rate with cheaper costs offering less benefits.” 2

Increasing Infrastructure in a High Value, Less Occupancy Scenario

Some attempts are being made to control budget travellers. Setting an entry fee to places like the Tiger’s Nest has helped, but the numbers are growing exponentially 3 . “We can handle more visitors with good management practices,” said Norbu. “But not in the current free-wheeling environment, where no one seems to be taking tough decisions to regulate and manage the industry.” An often quoted example is that while the Tourism Council regulates the tourist hotels (3-star and above), budget hotels fall under the purview of the Ministry of Economic Affairs. Air BNB is considered private residences.

Growing tourism is also affecting local residents and municipal services. Parts of Thimphu city are experiencing water shortage. Municipalities worry constantly about waste management, and Thimphu’s landfill has long surpassed its lifespan.

“I was shocked to see the garbage everywhere and the traffic jams in Thimphu. It’s not what I expected of Bhutan,” says a first-time visitor from Delhi, who added that the reality in Bhutan was very different from what he had heard.

Observers point out that even India’s hill stations have had to call for a “de-growth” of tourism as residents are crying out for basic amenities. The local population has also been known to turn against the industry and visitors.

Revenue Versus Consequences

Bhutan, too, is receiving calls for de-growth of tourism to protected areas. A 2016 study on Bhutan’s most visited wetland habitats has called for a “de-marketing” of Phobjikha Valley in the absence of regulations and a strict code of conduct. Karma Tshering also an eco-tourism consultant says that Bhutanese authorities and local communities are more reactive than preemptive in averting negative impact. He asserts that Bhutan’s plans to popularise eco-tourism has not yet taken off.

A road now runs through Phobjikha’s valley floor. Traffic regulations are absent and, without water treatment and septic systems, detergents from even high-end hotels are leaking into the ground. In 2016, Phobjikha had 30 home-stays and 15 hotels. Another seven to eight hotels are in the pipeline. People in Phobjikha report that a helicopter service frightens the Black-necked Crane ( Grus nigricollis ), according to the people.

“Wetland is the heart of Bhutan’s environment, but it’s losing out to the pursuit for economic returns,” says Karma. The report states that community involvement needs urgent attention and is critical for the success of eco-tourism. Local community members, however, lament the lack of control and their helplessness as investors from outside build hotels in Phobjikha.

A Disorganised Industry

In 2016, ABTO pointed out that the lack of collaboration and co-ordination in promoting and developing tourism has “stagnated” the industry, with various stakeholders “implementing actions in isolation”. 4 A lack of consultation has led to government approving budget accommodation infrastructure, and banks giving loans for building these budget hotels.

The report points out that even the local governments have gradually started to take decisions without consultations hampering the overall operation and development of the industry. Infrastructure development like road expansion is carried out without advance notice and consultations with the stakeholders. 5

Uncharted growth is more visible by the day. About 100 hotels are currently being constructed in Thimphu and Paro alone-rooms that are multiplying without a business plan and without a vision, and in breach of zoning regulations. 6 In the shortage of quality local products, a deluge of cheap crafts are imported for tourists. An industry analyst predicts that hotel owners, unable to repay bank loans, will soon pressure the elected government to liberalise tourism even further. “The tail will wag the dog,” he said.

Risks of Uncharted Growth and Possible Solutions

Given Bhutan’s vulnerability, an unregulated tourism sector is not an option. Tourism is a multi-dimensional industry where planning needs to be integrated with the communities involved. ABTO attributes many of the challenges in the tourism sector to the absence of a clear short and long-term progressive vision for the industry to move ahead.

To those paying high fees for exclusivity, “double standards” are not acceptable. The TCB believes that the policy needs to be same for all tourists but that it could consider a separate tariff for regional tourists. Tourism Director Chhimmy Pem says that there should be a minimum standard for hotels, tourists should be accompanied by a guide, and there should be rules governing transport.

The industry has identified issues that require clear decisions and action:

• Regulations for regional visitors to balance the numbers. Bhutan’s National Council called on the government to endorse a clear policy in Parliament in 2016 that is still awaiting action.
• Reports point to the “reverse discrimination” in protected areas. Local communities must be included in planning for sustainable tourism.
• Strengthen the capacity of local people to handle visitors and build appropriate services to spread the earnings. Simply providing discounts during the off-season is not enough to get people to visit these areas.
• Create a more equitable partnership between hotels and tour operators and reduce the dependency on tour operators for hotel bookings.
• Spiritual sites are living institutions and should be opened up to visitors with minimal negative impact. Hence, the need for trained guides and crowd control.

Bhutan’s planning document, the Bhutan 2020 report6 states:

“While giving access to our heritage, we must ensure that those who visit historical and religious sites demonstrate the appropriate respect for these sites. We must also be prepared to place some of our most treasured and hallowed sites beyond the reach of the merely curious, enabling them to retain their mystery and to serve as a source of inspiration”.

• Introduce regulations like the green tax on regional cars and motorbikes coming into Bhutan.
• Introduce updated regulations on monitoring and approval of the building of hotels. Encourage budget hotels to upgrade to a minimum of 3-star status to maintain the “high value” principle.
• Formally introduce the TCB e-permit system to reduce the long queues in the Phuentsoling checkpost and to enable the industry to track the number of regional visitors coming into Bhutan.
• At the rate at which budget hotels are expanding, Bhutan has to make a decision urgently.

Control and De-growth

ABTO recommended a policy for regional tourists as a priority. This was submitted to the chair of the Tourism Council (the Prime Minister of Bhutan) in June 2015. The issue, while widely discussed, is still awaiting action from the government and the various stakeholders.

The issue is not just about reciprocity or the concern about upsetting a large neighbour. It is about ensuring that Bhutan’s development aspirations of GNH and the environment are not compromised. It is about ensuring sustainability as the guiding principle for a small country that has committed to being a carbon sink for all time to come. 7 .

As the world grapples with over-consumption and growth, the new catchphrases emphasise the opposite-de-growth, de-marketing, slow tourism to resist the growth fetish. This thinking was pioneered in Bhutan when it began tourism, and has been the subject of study and recognition by other countries. TCB believes that the Sustainable Development Fee must remain. “Countries like Japan and New Zealand are trying to copy Bhutan and introduce tourism fees; it’s better we keep what we have,” says the TCB director.

Destinations inspired by de-growth thinking are wary of the homogenising impacts of globalisation. They do not have international retailers nor fast

• food outlets, but instead promote local distinctiveness and a sense of place and local identity. By doing so, they attempt to reduce the scale of the socio-economic system so that it will fit within the natural limits of their locality and capacity, such as the case of Phobjikha as a destination.

Veteran tourism stakeholders remind us of the many countries that came to study the high end, low impact model and how Bhutan is now, ironically, on the brink of tipping over if the complacency continues. If there’s one challenge of Bhutan’s democratic change, it is the ability — or inability — of newly elected governments to deal with a multi-dimensional industry and to take tough and clear decisions for the long-term.

While TCB defers to the government to make the tough decisions on regional tourism, the governments elected by the people do not seem to have the confidence to take these decisions, and have not prioritised tourism as an issue.

A draft Tourism Bill was prepared nearly 10 years ago but was never put to Parliament for adoption. Some measures were introduced, including the setting up of a Tourism Council to regulate the industry. Last year, the National Council raised the issue of passing the Bill but the government delayed decision on it.

In 2016 His Majesty The King reminded Bhutan’s youth 8 :

“… tourism as an industry was only introduced after the Coronation of His Majesty the Fourth Druk Gyalpo. It was suggested to us then that Bhutan would benefit economically from bringing in as many tourists as possible into the country. At that time, Bhutan was largely unknown to the outside world. And yet with Drukgyal Zhipa at the helm, we had the confidence to make our own decisions, to decide that our approach to tourism policy would be that of high value low volume. It seemed counter-intuitive at a time when tourists coming to Bhutan were so few. There were many sceptics. But because of that policy, Brand Bhutan emerged. And you see the results of that policy for yourselves today. People who make it to Bhutan feel privileged to be our guests. In hindsight, we realise the profound wisdom of that decision, but we could have easily gone the other way had it not been for that conviction we had to forge our own path, our future, and our destiny.”

Has Bhutan forgotten this wisdom?

• ABTO, Bhutan Tourism Review and Recommendations, 2016
• RSPN, carrying Capacity for Phobjikha, 2017
• TCB, Tourism monitors, 2014, 2015, 2016, 2017
• Tandi Dorji, Sustainability of Tourism in Bhutan, CBS journal
• Konstantinos Andriotis, De-growth in Tourism, Conceptual, Theoretical and Philosoohical issues, CaBI 2018

About Author: Siok Sian Pek-Dorji is the founder and currently, the Executive Professional Director for the Bhutan Centre for Media and Democracy. She is a journalist and has worked extensively in media and communications, and on women and children issues.

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How Bhutan aims to balance economy and environment through tourism

Bhutan is already 72% carbon negative, meaning it absorbs more carbon dioxide from the atmosphere than it produces. Image:  Pexels/Soonam Wooeser

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Stay up to date:, travel and tourism.

• Bhutan, a tiny Himalayan kingdom known for its pristine environment and sustainable development, will cap tourist numbers at 200,000 a year from 2023 to protect its natural resources and fight climate change.
• The move is part of the country's efforts to become carbon neutral by 2025.
• Bhutan is already 72% carbon negative, meaning it absorbs more carbon dioxide from the atmosphere than it produces.
• The government said the cap would be enforced through a quota system, with each tourist paying a daily fee of $250. The money will be used to fund conservation and development projects.

In the scenic Himalayan kingdom of Bhutan, cleaning squads patrol forests and mountain trails on the lookout for litter left behind by tourists, removing empty water bottles and crisp packets stuck in bushes and trees.

The money to run these teams comes from a tourist tax Bhutan has levied for decades to avoid over-tourism and preserve its status as South Asia’s only carbon-negative country - meaning it absorbs more emissions than it produces annually.

Bhutan halved the daily “Sustainable Development Fee” (SDF) - to $100 - last week as it strives to strike a balance between supporting the local economy and jobs, and protecting nature and the environment in the face of worsening climate change impacts.

Under the country’s principle of “high-value, low-volume” tourism, Bhutanese officials told the Thomson Reuters Foundation that the tax goes towards upgrading infrastructure, preserving natural and cultural treasures, and investing in electric transport to cut fossil fuel dependency.

While the tiny country of fewer than 800,000 people is currently in the spotlight, it is far from alone in this regard.

A 2018 report by the Intergovernmental Panel on Climate Change found we have until 2030 – just 11 more years – to avert climate change.

The run-up to 2020 is a crucial period for delivering sufficient climate action to limit global warming to 1.5°C, as countries move to expand their climate commitments.

To help meet this global challenge, the World Economic Forum's 2019 Sustainable Development Impact summit has made Accelerating Climate Action one of four focus areas.

Following the UN Secretary-General’s Climate Action Summit this month, this meeting will bring together stakeholders to cap global warming at 1.5°C through innovative partnerships and smart technologies. The action areas include heavy industries and transport, energy innovation, nature-based climate solutions, restoring ocean health and the role cities, among others.

As nations globally seek to revitalise their tourism sectors after the COVID-19 pandemic, there is growing debate about how best to attract more visitors and boost revenues without causing overcrowding and fuelling pollution and harm to the environment.

Sustainability experts said the traditional approach of evaluating tourism through visitor numbers alone was outdated and damaging to the sector, and urged governments to consider ways of welcoming people for longer and more-considered stays.

“(A) sustainability fee is one of the ways to ensure a destination does not degrade,” said C.B. Ramkumar, vice chairman of the Global Sustainable Tourism Council, a U.S.-based non-profit. “It is a good tool for conservation.”

While many countries and cities have some form of tourist tax, few places have followed Bhutan’s lead in ensuring that the cash goes towards conservation or sustainability efforts.

New Zealand in 2019 introduced a NZ$35 ($21) tourist tax to fund conservation and infrastructure projects, while Indonesia’s holiday island of Bali is to impose a 150,000 rupiah ($10) fee from 2024 to help preserve its culture and environment.

Using the tourist tax to boost conservation efforts

Tourism is responsible for around 8-11% of global greenhouse gas emissions - mostly due to transportation - according to the World Travel and Tourism Council (WTTC), an international forum.

It is also among the most vulnerable sectors to the impacts of climate change, with researchers citing soaring temperatures and rising sea levels that can affect visitor numbers.

For example, about 20,000 foreign tourists were evacuated from the Greek island of Rhodes in July, where a wildfire burned resorts and hotels. Greece has said it will offer a week’s free stay on Rhodes in 2024 to visitors whose vacation was cut short.

Overall, demand for eco-friendly tourism is growing, yet very few people are willing to pay more for sustainable travel, according to recent studies and warnings from sector executives.

In Bhutan, the SDF has been revised over the years - with discounts available for visitors making longer trips.

When Bhutan reopened to tourists in September 2022 after more than two years of COVID-19 closure, it raised the tax to $200 from the $65 it had charged for about three decades - saying the money would offset the carbon generated by visitors.

This fee hike, coupled with the pandemic’s impact, hit tourist numbers and resulted in losses for tour operators, hotel owners, and handicraft and souvenir shops in the country.

Bhutan welcomed nearly 60,000 tourists between January and August this year, earning the nation $13.5 million in revenue from the SDF, according to government data.

In 2019, before the pandemic, there were about 316,000 tourists, generating $88.6 million in SDF revenue.

When Bhutan announced the SDF reduction this month, the government said the move aimed to revive the tourism sector, generate employment, and earn the country foreign exchange.

Bhutan plans to lift tourism’s contribution to its $3-billion economy to 20% from about 5% now - yet no time-frame has been set.

Dorji Dhradhul, the director general of Bhutan’s tourism department, said the tourist tax is vital to stepping up the nation’s conservation efforts as it faces climate change threats of melting glaciers and ever-more unpredictable weather.

The SDF has led the country to explore “solutions to balance its revered ecological conservation practices with socio-economic progress”, Dhradhul said by email.

The tax funds free healthcare and education for the country’s citizens and is used to offset the carbon footprint of visitors by planting trees, cleaning and maintaining trails, and electrifying Bhutan’s transportation sector, Dhradhul said.

“Our future requires us to protect our heritage and forge fresh pathways for forthcoming generations,” he said.

Bhutan’s “carbon negative” approach began in the 1970s, when its then-king pushed for an economy built in part on sustainable forest management - balancing conservation and development.

Its forests absorb more than 9 million tonnes of carbon each year, while its economy, which is designed to cut fossil fuel use and waste, emits less than 4 million tonnes, Dhradhul said.

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Bhutan has long been a prime holiday destination for Indian travellers in particular. Entry for Indians had been free until 2022, when a daily tax of 1,200 rupees ($14.50) was introduced.

Mumbai-based tour operator Rakesh Kalyani has a longstanding collaboration with hoteliers in Bhutan, and said he was not surprised by the move to impose a tax on Indian tourists.

“Tourists littered, someone even climbed a stupa (Buddhist shrine) and took pictures. How do you stop that?” asked Kalyani, who said he now has no bookings for Bhutan with many clients instead preferring to visit nearby northeastern Indian states.

The fee for Indian tourists will remain in place for at least another two years as Bhutan prioritises the wellbeing of its environment, culture and people over “quantity in tourism”, according to Dhradhul.

As more and more places worldwide consider tourist taxes, they run the risk of excluding those seeking affordable travel.

“They want to preserve their culture, but not everyone is able to travel now,” said Arjun Verma, who runs Bhutan Divine Tour agency in Siliguri, a district in India’s eastern state of West Bengal, which serves as the country’s gateway to Bhutan.

“As tour operators, we are facing a lot of problems.”

In Bhutan, Jigme Tshering, chairman of the Hotel and Restaurant Association, a national federation, said that while the SDF was aligned with the country’s vision of sustainability, it also posed challenges in terms of “the impact on businesses”.

He said he hoped the reduced tax will help the tourism industry grow at a faster pace than in previous months - a view echoed by local businesses seeking more customers and income.

In Bhutan’s Paro, the picturesque valley home to the Tiger’s Nest Monastery, handicraft shop owner Tashi Lhamo said she had cut down spending on family holidays and new clothes due to the loss in business over the past year as tourist numbers dropped.

“Most of our customers are Asians and few are from the United States,” Lhamo said in a phone interview.

“But I am hopeful for more international tourists to come now that they have reduced the SDF. Indians buy small items, but our main business comes from international tourists,” she added.

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Bhutan Tourism Revenues

Tourism revenues in bhutan increased to 0.02 usd million in december from 0 usd million in november of 2021. tourism revenues in bhutan averaged 4.62 usd million from 2009 until 2021, reaching an all time high of 17.30 usd million in november of 2018 and a record low of 0.00 usd million in april of 2020. source: royal monetary authority of bhutan,   markets,   gdp,   labour,   prices,   money,   trade,   government,   business,   consumer,   taxes,   climate.

Overcoming obstacles to illuminate Bhutanese education

Unctad calls for coordinated effort and increase in financial resources, bhutan’s literary extravaganza to start on august 2, 2024, སྤྱི་ལོ་ ༢༠༢༣ ནང་ འབྲུག་ལུ་འཛམ་གླིང་སྤྱི་ཚོགས་ཀྱིས་ ཡུན་བརྟན་གོང་འཕེལ་གྱི་དོན་ལུ་ མ་དངུལ་ཡུ་ཨེས་ཌོ་ལར་ ས་ཡ་ ༣༥ ལྷགབ་ཅིག་ རྒྱབ་སྐྱོར་འབད་ཡོདཔ།, trending now, revenue for bhutan expected to increase during fy 2022-2023.

• June 9, 2023
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Significant contributions anticipated from Mangdechhu Hydroelectric Project (MHP), dividends from the Druk Holding and Investments (DHI) and royalties from the tourism sector

In what is a positive development for Bhutan’s economy, the total revenue that can be generated for the fiscal year 2022-23 has been revised to Nu. 40,829 million ngultrums (mn), marking a significant increase of 12 percent from the initially budgeted amount of Nu. 36,368mn.

This upward revision is expected to have a favorable impact on the country’s financial health, according to the third quarter macroeconomic situation report released by ministry of finance (MoF).

Further as per the Constitutional mandate, recurrent budget has to be met from domestic revenue, which is estimated to be about Nu 43.24 billon (bn), apart from another Nu 9.82 bn as grants. The report also states that the revenue growth is driven by marginal increases in both direct and indirect taxes.

Notably, significant contributions are anticipated from profit transfers from the Mangdechhu Hydroelectric Project (MHP), dividends from the Druk Holding and Investments (DHI) and royalties from the tourism sector. These positive trends indicate a promising economic outlook for Bhutan, the report says.

Meanwhile, domestic revenue refers to the generation of government revenue from domestic resources, from tax or non-tax sources. As per the MoF, domestic revenue covers 19 % of Gross Domestic Product (GDP) and 122.52 % of recurrent expenditure of the government.

During the previous fiscal year, (FY) 2021-22, the country witnessed a total domestic revenue realization of Nu. 39,043.07 mn, reflecting an encouraging increase of 9.7 percent from the budgeted amount of Nu. 35,600 mn.

“The noteworthy revenue growth was primarily attributed to a surge in Corporate Income Tax (Nu. 2,822.07 million), Sales Tax (Nu. 1,498.07 million), and dividend receipts (Nu. 1,042.21 million),” the report states. However, taxes related to international trade and transactions, such as customs and other import duties, saw a decline.

The revenue generated in FY 2021-22 was sufficient to cover 56.46% of the total expenditure, marking an improvement from the previous fiscal year where it covered only 50.46 %. This increased coverage was primarily a result of a decrease in the percentage change of total expenditure and an increase in the percentage change of revenue. While revenue increased by 8.89 % from the previous year, total expenditure decreased by 2.72 %. The ratio of domestic revenue to current expenditure for FY 2021-22 stood at 113.4, demonstrating a positive trend compared to the previous fiscal year’s ratio of 112.4.

Additionally, the report states that at the end of the first quarter of the financial year 2022-23, the total amount of resources obtained was 22.12 % higher than what was initially estimated. This means that more resources than expected was generated.

Out of these resources, 65.02% came from domestic revenue. External grants, which are funds received from other countries or organizations, contributed 48.75% to the total resources.

Additionally, other receipts, such as fees or fines, accounted for 45.97% of the total resources obtained.

Furthermore, external borrowings made up 3.17 % of the total resources realized.  Recoveries, which represent the amount of money that was paid back, accounted for 0.98 % of the total resources obtained.

The report says that these financial indicators highlight the positive trajectory of Bhutan’s economy, with increased revenue surpassing initial budget expectations. The country’s reliance on diverse revenue streams and careful expenditure management have contributed to its economic stability and growth prospects for the coming fiscal year.

Tshering Pelden from Thimphu

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16,520 tourists visited Bhutan since September

International tourist arrivals expected to reach between 55% and 70% of 2019 levels in 2022 

Dechen Dolkar  

Despite the drop in arrivals, 16,520 tourists have visited the country since the opening of the border in September this year.

Records with the Department of Immigration show that of the total arrivals, 8,273 were Indian tourists paying the Sustainable Development Fee (SDF) Nu 1200, so far this year. However, only about 3,431 tourists have visited paying SDF of USD 200.  About 4,816 tourists visited paying the old SDF of USD 65 per night.

Since the opening of tourism, the industry has generated a revenue of approximately USD 7.06M and Nu 46.68M from SDF.

The average duration of stay of international tourists is 7.77 nights and 4.89 nights for Indian tourists.

Data on how many tourists visited the Eastern and Southern parts of the country are not available.

According to the latest United Nations World Tourism Organization’s tourism barometer, arrivals in Europe and the Americas were still 43 percent and 46 percent below 2019 levels respectively. Asia and pacific recorded 93 percent below 2019 as several destinations remained closed for non-essential travel.

In Bhutan, as a conservative forecast, the arrivals in 2023 are expected to be about 20 percent of 2019.  Arrivals are not expected to reach the 2019 level even by 2025.

An official from the Department of Tourism said that the introduction and implementation of Tourism Levy Act 2022 will have an impact on arrivals. It is also assumed that arrivals from India will decline by 50 percent when compared to normal projections.

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40,665 tourists have visited Bhutan from September 23, 2022 to April 15, 2023

staff 04/18/2023 LOCAL NEWS 2 Comments 17,195 Views

A total of 40,665 tourists have arrived in Bhutan from 23rd September 2022 until 15th April 2023. Out of this figure, 23,944 are Indian guests who have paid Nu. 1,200 per person, per night, while 16,721 are other international guests paying USD 200 per person, per night. Out of the 16,721, 8,945 guests have paid the old SDF rate of USD 65, while 7,776 have paid the new SDF rate of USD 200. The Department of Immigration has confirmed that this arrival data does not include those visitors who have come as official guests, or for meetings, conferences and exhibitions, or those invited by government agencies.

A total of 7,385 tourists arrived in the month of March 2023 which is slightly less than the number of arrivals in October,2022 the strongest month so far with 8,313 arrivals. From April 1 – 15,  7,072 guests have arrived in Bhutan.

Moreover, in the months of January, February and March 2023, more international guests came paying the new SDF rate as compared to the old rate. In January, 253 guests paid the old SDF, and 468 paid the new SDF; in February, 185 paid the old SDF while 574 paid the new SDF; and in March, 1,059 paid the old SDF and 1,689 paid the new SDF. 

From September 23, 2022 till April 15, 2023, Bhutan’s top ten source markets were India (23,944), America (4,216), Malaysia (1,843), the UK (1,288), Vietnam (922), Singapore (856), Germany (793), Australia (524), Canada (522), and France (503). 

“The numbers are looking encouraging and gradually picking up. Beginning this year, we have seen more tourists come in paying the new SDF rate as compared to the old rate. The Department of Tourism will continue our efforts to facilitate more positive global coverage on Bhutan and generate more tourist arrivals,” said Dorji Dhradhul, the Director General of the Department of Tourism.

“We also continue to work closely with tourism partners to create new, unique and creative products and itineraries and improve the guest experience. In particular, we know that an area of concern is the washroom amenities. Currently, there are several models of management in operation for the washrooms around the country. Four washrooms are managed by DoT directly, and we have also recently outsourced two restrooms on the Phajoding trail to a private organisation, but the majority are managed by the dzongkhags themselves. We know that many of these washrooms are not well maintained due to various reasons, and do not live up to the high expectations of the guests visiting our country. We are committed to working in partnership with the dzongkhags to find urgent solutions as we know that the current standards are not good enough,” he concluded.

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The tourists coming in paying the new US$200 per day will decrease as time passes and those who qualified for the US$65 rate run out: and the tourist industry, and therefore the Bhutan economy, will suffer.Maybe in the now is alright … but in the future … The US$200 per day rate is not sustainable.

I strongly urge that SDF concessions be made for large groups staying for extended time. I have brought 20+ high school students from Hawaii USA three times (2016, 2017, 2019) for three weeks of community service visits to include tree planting, trail maintenance, stupa whitewashing, trash pick-up, and making donations of goods and money at monasteries and an orphanage. With the new elevated SDF I will bring fewer students in 2023 and the program is in jeopardy in the coming years.

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