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Tour Operators Reject Proposed Hike

Tourism Council Secretariat’s recent proposal for funds from tour operators to support their functioning met with an outright denial from more than 100 tour operators, who had an emergency meeting yesterday in Thimphu.

The tourism secretariat had, last week, proposed an increase in royalty of USD 15 a tourist a day during peak tourist seasons, and USD 10 a day during the lean season, so they could use the proceeds for their functioning.

In its council meeting, the secretariat had proposed that either 25 percent of the total royalty collected go into running the secretariat, or the existing royalty be increased from USD 65 for peak seasons to USD 80, and for lean periods to USD 65 from existing USD 55.

From that increase, they wanted the government to retain in its coffers the same royalty as it does so far, but dole out the amount hiked to the secretariat for their operation.

Today, the minimum daily tariff of USD 250 and USD 200 from a tourist is deposited with Tourism Council Secretariat account first, from which the royalty of USD 65 and USD 55, along with 2 percent tax deducted at source, is diposited into the government coffers.

The remaining amount is for the tour operator.

If the increased royalty were to be levied, keeping the average stay per tourist at 7.5 days, the tourism council would be earning about USD 112.5 or over Nu 6,000 a tourist a day.

In 2011, the country received more than 60,000 tourists, of which over 36,000 were international dollar paying ones.

The association of Bhutanese tour operators (ABTO) officials said, during the peak season, the present trend was that, of the USD 250 a tourist a day tariff, tour operators had to set aside USD 25 as commission for their agents.

Thereon, a royalty of USD 65 went into the government coffers that left the operators with USD 160, from which more amounts were deducted as tax at source, Bhutan sales tax and business income tax.

With the royalty and the taxes, ABTO officials said the government gained more than USD 91 for every tourist a day, while the tour operators retained about USD 54.

“Within that margin, tour operators have to spend on accommodations, food, transport, guides’ payments, and museum fees, among others,” an ABTO official said.

With the increased tariff, tour operators’ earnings dropped to about USD 50, while the government’s earning increases to about USD 94.

Based on last year’s annual tourism report, tourism sector’s gross earnings was USD 47.68M, of which, the royalty collected was USD 14.89M.

That as the benchmark, if 25 percent of the total royalty, 15 for peak season and 10 for the lean season, goes for tourism council secretariat’s operation, it would add up to about USD 3.73M or over Nu 222M a year.

Apart from that, visa fees made up an additional USD 740,000 and surcharges another USD 410,000.

“Visa fees and surcharges alone make quite a chunk of the budget for the secretariat,” one tour operator said.

A majority of the tour operators at the meeting said they had already sold their tour packages for the next two years based on the existing tariff.

“Changing the tariff frequently affects our agents, both in the region and abroad, in selling our tour packages,” a tour operator said.

Many tour operators said the secretariat seeking its own funding at the cost of tour operators’ loss through increased tariff was unfair, especially when it was an unilateral decision.

“It doesn’t make sense to pay somebody to regulate us, there’s conflict of interest,” one tour operator said. Some tour operators also said the secretariat’s delinking from civil service was unnecessary.

One of the tour operators said, although it was hoped the secretariat would perform with more professionalism and dynamism, now that it is delinked from civil service, it was in vain.

Even with full support from the government, he said the secretariat could not do much for the industry.

“What makes them think they’ll perform with dynamism as an autonomous body?” he said. “After all, it’s the same people working for the same organisation.”

“If we have to disburse such a large chunk of money for the secretariat’s functioning, then we don’t want such dynamism,” another tour operator added.

Sensing a resonance in the way all tour operators felt about the tourism council secretariat’s proposal, the meeting concluded within an hour after it began at 10am.

In case the proposal comes through, it will be implemented from January 1, 2013.




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