The government of Bhutan has announced a significant reduction in the daily tourist fee, slashing it by 50% from $200 (€183.69) to $100 (€91.85) per visitor per night. This decision comes as Bhutan’s tourism sector continues to grapple with the aftermath of Covid-19 restrictions, striving to regain its pre-pandemic tourist affluence.
When Bhutan reopened its borders to tourists in September last year, it introduced a “Sustainable Development Fee” of $200 per night, marking a substantial increase from the previous fee of $65 (€59.70) that had been in place for nearly three decades. The government justified the increase by earmarking the funds for offsetting the carbon footprint generated by visitors. Authorities stated that the objective was to attract wealthier tourists, with the generated revenue directed towards preserving the pristine natural landscapes and mitigating the ecological impact left by tourists.
However, recognizing the need for a course correction, Bhutan has opted to reduce this fee, a move set to take effect in September and span a four-year period. According to Dorji Dhradhul, the Director-General of the Department of Tourism, this fee reduction could stimulate tourism, particularly during the peak September-December period, which encompasses various religious and cultural events in the predominantly Buddhist nation.
The move comes after other measures taken earlier this year to boost tourism did not have the desire effect. In June, the country announced that tourists staying for more than four days would benefit from a discount to the sustainable development tax. Under the revised policy, visitors paying the tax for 4 days are allowed to stay 8, while those paying 12 days, can stay for a full month. This incentive applies exclusively to tourists paying in dollars.
Dhradhul revealed in June that, since January, more than 56,000 tourists had visited Bhutan, but a significant portion, approximately 42,000, were Indian nationals who are subject to a much lower fee of 1,200 Indian rupees (€13.32) per day.
With its population of fewer than 800,000 people and nestled in the heart of the Himalayas, between India and Tibet, Bhutan only began welcoming tourists in 1974, with a modest 300 visitors. By 2019, the number had surged to 315,600, a 15.1% increase from the previous year, according to official data.
Tourism is an essential element in the country’s economy. However, the sector took a severe hit during the pandemic, with foreign tourist arrivals plummeting by 91% from over 315,000 in 2019 to approximately 30,000 the following year. Additionally, the tourism industry saw an 88% decline in revenues in 2020 due to Covid-19-related measures, according to data from the Tourism Council of Bhutan. Before the pandemic, tourism in Bhutan provided employment to around 50,000 Bhutanese citizens and contributed approximately $84 million annually in foreign exchange.
Bhutan now aims to increase tourism’s contribution to its economy from the current 5% to 20%, although no specific timeline has been established for this goal. “This is in view of the important role of the tourism sector in generating employment, earning foreign exchange … and in boosting overall economic growth,” the government has stated.
The country’s unique approach to tourism focuses on attracting visitors with substantial purchasing power while limiting the volume of tourists to safeguard its ecology and culture. This approach stands in contrast to neighboring Nepal, which welcomes a more significant influx of tourists and offers activities such as rock climbing, a pursuit that Bhutan has banned.
