With the global economic recession showing no signs of slowing down and countries like USA and Japan worst hit, the Bhutanese tourism industry has seen its tourist arrivals drop by more than 30 percent in just under a year.
Last year, the number of tourists visiting Bhutan was 5,355 between January and March alone. For the same period this year, the number has dwindled to 1,480.
“The average duration of nights spent, which was an average of 12 in the past, has come down to about 7-8 nights now,” said Yangphel Tours and Treks Director, Karma Lotey. This year, Yangphel has seen about 260 visitors, which pales in comparison to last year’s 12,000 visitors. As a result, the company’s buses and employees are underutilised, said Karma Lotey. Its Zhiwaling Hotel in Paro is also not doing too well.
Under pressure from global recession, the tourism industry is the worst affected and operators may have to downsize their employees or shut down soon, say tour operators, who reason that most tourists coming to Bhutan are from America, the worst hit country, followed by Europe, Japan and others that are also being affected.
Sakten Tours and Treks Managing Director, Tshewang Rinzin, said that about 160 of his guests, scheduled to arrive for the spring season, have cancelled their visit. Many of its travel agents in USA and Europe have also reduced previous bookings.
The manager of Bhutan Tourism Corporation Ltd., Dipendra Rai, said that around 30 bookings got cancelled and only 250 guests have visited to date.
While the government has provided interim measures to help tour operators cope with the downturn, it is not yet significant enough to cushion their fall, said Yangphel’s Karma Lotey.
Following requests from tour operators, the Tourism Council of Bhutan (TCB) has reduced its royalty and discounted Drukair tickets. TCB deferred the scheduled tariff revision of USD 250 for this year to a later date and provided a discount of USD 20 during peak season and USD 16 during off-season (January, June and July) on royalty after the 9th night. In addition, hoteliers have also suspended their annual room tariff increase and Drukair reduced fuel surcharge by USD 3 from December 2008.
“With visitors’ duration going down to about a week and discounts provided only after the 9th night, there’s no visible implication,” said a tour operator, who did not want to be named for fear of repercussions.
TCB officials, however, said that the duration discount was based on its research. “One of the information collected is the average length of stay which was 8.7 nights. Decision on giving discount from the 9th night onward was to encourage longer stays and make long trekking viable as well,” said TCB spokesperson, Tashi Peday.
A tour operator said that, if the trend continued, the government could stand to lose too, as a chunk of tourist money is contributed as royalty. Government revenue from royalty for 2007, according to TCB records, was Nu 10.60 million and, for 2008, it was Nu 13.80 million. The amount is expected to drop dramatically this year.
Tourism is Bhutan’s main hard currency source and the country’s second largest revenue earner and employs a large number of Bhutanese in towns as well as villages.
Meanwhile, tour operators say they want to cut costs. “We’ve already invested in our employees and can’t release them but, if it goes on till the next season, then we’ll have to take action,” said a tour operator.