By Rabi C. Dahal
19 September 2008
Small handicraft outlets in the country are crying foul over exorbitant commissions paid by bigger competitors as incentives to tour guides. The smaller retailers say they are unable to pay as much to guides and so are unable to sustain their businesses. Hoteliers, meanwhile, complain about tour operators and guides demanding luxurious rooms and food when they are with the tourists. This is said to be most rampant in Paro and Bumthang.
A source in the tourism industry said almost all the handicraft outlets in the country paid commissions to guides, drivers and tour operators and it has now become a custom. About five handicraft shops in the capital are said to be paying (as commission) as much as 20 percent of the value of items bought. Most others paid 15 percent. He said that last year a guide earned Nu. 300,000 as sales incentive from a handicraft shop for a single purchase.
The earnings of freelance guides also appear to be unaccounted. A freelance guide said he is not paying tax for what he earns and said others may not be paying too. Except for the Handicrafts Emporium in Thimphu, all handicraft shops said that the commissions paid to guides were tagged on the selling price of the item. This means that the customers pay the actual price plus the commission.
A handicraft retailer said it was difficult to sustain her business with the amount she earned. After paying five percent Visa Credit Card commission to the banks, and 15-20 percent to the guides, little remained to pay the staff and rent. She blamed the old-time shopkeepers for starting such schemes. Guides should get some incentives, she said, but not the amount they are getting today as handicraft items are already expensive and it is difficult enough to make a profit.
The Tourism Council of Bhutan (TCB) said that they were aware of the commission that guides demanded from hotels, restaurants and handicraft outlets, but they have received no written complaints. A TCB official said the practice of taking commissions has increased in recent times and there are many informal complaints, but if people come with a written complaint which is found to be true, the retailer’s trade licence would be cancelled.
The Tourism Bill of Bhutan 2007, draft A, states, ‘A tourist guide or driver of a tourism transportation vehicle shall not request, receive or agree to receive any commission or other benefit from any person for directing a foreign tourist to a particular business establishment or in respect of goods and services acquired therein by a foreign tourist other than the previously agreed contract price. It also says, ‘A tour guide or driver may not demand any food, drink or accommodation from a hotelier, other tourist accommodation provider or restaurateur other than those contractually agreed in advance; No person shall give or offer any commission or benefit….’ However, for reasons still unknown to most, the Bill has not been put up for endorsement to the National Assembly.
Karma Thinley, a freelance guide who has earned Nu. 60,000 as commission on a single purchase, said it was not the guides but the handicraft sellers who had initiated the commission system. He said it started when the business people wanted maximum sales and when competition intensified, they raised the percentage.
The commission system started at some private handicraft houses in the early 1990’s with 5-10 percent incentives. Back then, handicraft outlets owned by government were virtually dying. The Executive Director of the Handicraft Emporium in Thimphu said that they too were compelled to start the commission-incentive system with advice from government officials. The emporium today pays guides an incentive of 15 percent.
He agreed that the system was killing smaller competitors. “If it could kill a large handicraft owned by government, why not small ones?” he said. “But to remain in the market it is necessary to adapt with the system.”
Officials of the Hoteliers Association of Bhutan say most of the guides were professionals who adhered strictly to the code of conduct but there were always a few who thought they had every authority to exploit the hotel owner, especially in Bumthang and Paro. An official said that guides had the notion that the hotels should provide them with food and lodging, which was not true. He said that a guide’s job ended when he reached the doorsteps of the hotels, and since hotels were also in the service sector, the job of taking care of guests fell on them.
At a meeting last Friday, hoteliers complained where some guides teased and verbally abused female staff in the hotels. The hoteliers felt that the training course for guides needed to include ethics and courtesy.