With its long-standing policy of “high value, low volume”, Bhutan’s travel sector is often held up as the world’s leading example of sustainable tourism. For the last three decades, foreign visitors to the tiny Himalayan kingdom have been required to purchase all-inclusive packages from designated tour operators for a minimum daily price, which included a sustainable development fee (SDF) of US$65.

When Bhutan reopens to inbound vaccinated travellers on September 23 (no quarantine but PCR testing on arrival), it will do so without the minimum daily package rate (MDPR) but with a more than three-fold increase of its SDF.

The new US$200 per night fee will go towards activities that “promote carbon-neutral tourism and building a more sustainable tourism sector,” Tandi Dorji, Tourism Council of Bhutan (TCB) chair and the country's foreign minister, said in a statement.

Reactions from industry members have been mixed.

CEO and founder of tour operator Bhutan Travel Club, Pelden Dorji, said the legislative bill to remove the MDPR and increase the fee was “passed by the parliament so quickly that we had no chance to really voice out our concerns.”

The former sustainable tourism consultant to the TCB has taken to Facebook to express his opposition in several lengthy posts, writing that “the policy changes lack research and critical analysis.”

He notes that, despite the TCB’s sustained efforts to encourage longer lengths of stay “through creative product development and incentives”, the average length has been seven nights since 2005. Dorji argues that the fee increase will discourage longer stays — which will especially impact visits to more remote destinations — and will also curb tourism product diversification.

“For five years I have been promoting mountain biking through my adventure riding company Bhutan Rides. Now, nobody is going to join these tours as adventurers do not spend top dollar,” he told Travel Weekly Asia.

“I had about eight mountain biking groups planned for 2022-23, and now all of them have been cancelled and diverted to Nepal and Thailand. The same goes for our trekking groups. Bhutan had the opportunity to become the adventure capital of the world, but now adventure tourism will be dead,” he continued.

“I really am concerned for the country’s economy going forward.”

Lying between India and China, tourism is a significant source of income for Bhutan’s economy, employing around 50,000 people and contributing an annual average of about US$84 million from 2017 to 2019 in direct foreign exchange.

Reinforcing the commitment to sustainable development

Khin Omar Win, co-founder and owner of 12-suite Gangtey Lodge Bhutan, supports a lower increase of US$100 instead and believes it will be positive in the long run. Moreover, she believes the significant fee hike now will prolong recovery, and its implementation could have been staggered to allow the industry to recover quicker and for the market to adjust to the policy changes.

“Additionally, because demand varies significantly throughout the year, and from place to place, the rate could have been set at different levels according to the season, to encourage demand throughout the year,” she observed.

In terms of how the increase will impact Bhutan’s various markets, Win predicts that for the “ultra-luxe traveller” the impact will be negligible. “The Indian luxury market will potentially be the first to recover, but DMCs and properties that rely on the three- and four-star international market (rather than the regional market) are likely to be hit the hardest. The government is currently providing support through loans for hotel upgrades and training to upskill human resources to counter this.”

The responsible tourism practitioner noted that while many other countries have talked at length during the pandemic about sustainability, on reopening they slashed prices and focused on economic recovery at the expense of environmental sustainability, with no regards to carrying capacity.

“The increase reinforces Bhutan’s commitment to sustainable development and its visionary high impact, low volume tourism policy.”