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The myth of high value–low impact policy

The tourism industry, which the government identified as one of the jewels to strengthen the economy has come under much scrutiny.

While it may not always be for the right reasons, the discourse is good given the impact the industry has on the economy. It contributes more than nine percent to GDP, earns the highest hard currency reserves and provides the highest employment opportunity.

Yet, the industry, which operates on the tourism policy of high value, low impact appears to be undermining the only policy it is expected to value. The issue of under-cutting, selling Bhutan for less than what the minimum daily tariff prescribes is claimed to be rampant and unhealthy for the industry but one that many tour operators indulge in and tolerate to stay in the business.

For the association of tour operators and the tourism council of Bhutan, this practice is a non-issue. The tour operators indulge in it while the council appears to be content with the royalty tour operators are mandated to pay. This means, the increase in tourist arrivals is more a consequence of undercutting than of the initiatives taken. With the tariff revised, our policymakers have given the operators more room to fiddle with the tariff.

With the government and concerned authorities obsessed in increasing the number of tourist arrivals and agencies such as ABTO and TCB, complacent on it, this practice is in a way legitimised.  It is an open secret that this compromises the quality of service provided to tourists but with weak monitoring and accountability institutionalised, there appears to be little done to assess the impact this would have on the tourism sector.

The National Council has pointed out the ramifications of this practice on the country’s tourism policy. It will lead to Bhutan being a cheap destination and has warned that rampant undercutting would cause leakages of profit and foreign exchange and gradual loss of control of tourism development in the country. The policy of imposing high tariff has succeeded in making Bhutan an exclusive destination. With tour operators exploiting this policy and authorities reluctant to monitor, the country is losing the worth of being a high value destination.

However, there are those who argue that reducing the tariff is akin to offering discounts, which happens in all businesses. To complain and problematise it is futile because it has no impact on the revenue to the state. Who then has the responsibility to maintain the policy of high value, low impact, if tourism is only a business for tour operators and an avenue to earn royalty for the tourism council?

The recently revised Tourism Rules and Regulations, 2017 specifies when a tourist is eligible for discounts. And Section 3.9.1 of the rules state that, it shall be an offence if any person, engaging in tourism activities charges lesser than the Minimum Daily Package rate as prescribed.

But ABTO is more in defence of this offence and the tourism council is anything but offended.

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