As Venice and other European hot spots explore permit systems and daily fees to limit the number of tourists, the tiny Buddhist kingdom will require a $200 tax on international visitors when it reopens this fall.
The tiny Buddhist kingdom of Bhutan on the eastern edge of the Himalayas, often referred to as “the last Shangri-La” for its abundance of natural beauty, sustainable development and rich cultural heritage, has long resisted the quick financial returns of mass tourism in favor of conservation. The approach is aligned with a cultural philosophy where the country’s wealth and prosperity is measured, through a national happiness index, as an alternative to the gross domestic product.
Since 1974, the year when foreigners were first permitted to visit Bhutan, the country has had a unique “high value, low volume” tourism policy, requiring international visitors to pay at least a daily rate of $250 that covered accommodations, meals, a mandatory tour guide and included a $65 “sustainable development fee” to the government. The package-like approach was aimed to preserve the natural resources of the country by limiting the number of international visitors and controlling where they went. While some tourists complained of poor hotel plumbing, slow internet access and bland food, many appreciated the ease of the predetermined tours.
Now as the government of Bhutan prepares to reopen its borders on Sept. 23, it has overhauled the tourism system and will significantly raise the cost to visit. Visitors no longer need to be on a package tour, but they will now have to pay a $200 daily fee directly to the government, and pay separately for their accommodation, meals, tours and other travel expenses. The new policy, officials say, will rebrand Bhutan as “an exclusive destination,” attracting “discerning tourists” who will have access to a wider range of higher-quality services.
“Covid-19 has allowed us to reset, to rethink how the sector can be best structured and operated, so that it not only benefits Bhutan economically, but socially as well, while keeping carbon footprints low,” said Dr. Tandi Dorji, Bhutan’s foreign minister and chairman of the Tourism Council of Bhutan. “In the long run, our goal is to create high-value experiences for visitors, and well-paying and professional jobs for our citizens. ”
But many tour operators express anxiety over the change. They are worried that the new structure will leave them without any business — uncertain whether they will be able to attract a sufficient number of tourists with the higher fee, or if tourists will even require their services at all, now that they will have the option to book directly through hotels, tour guides and the like.
“Just when we thought we were seeing the light at the end of the tunnel after two-and-a-half years of being out of business, the government’s tourism amendment bill has thrown us back in the darkness and we have no idea how to go about it,” said Pelden Dorji, the chief executive officer of the Bhutan Travel Club, a company that specializes in adventure travel experiences.
Mr. Dorji has already received cancellations from groups that had booked, but not paid for, packaged trips they had scheduled later in the year. He said the group members felt that they could not justify paying an additional $200 a day on top of the other expenses that had been agreed upon as part of the previous package deal.
‘Deep love and respect for nature’
Under the previous policy, all bookings and payments had to be made through registered local tour operators, who were required to organize a prearranged itinerary with fixed dates and overnight stops.
“It’s basically a package tour that lets you see an authentic, untouched corner of paradise while protecting itself from being invaded by tourists,” said Megan Petersen, 44, a London-based makeup artist who visited Bhutan in 2017. “It’s genius and places with overtourism problems should use the same model.”
Ms. Petersen spent eight days exploring Bhutan with her sister, trekking through forests and mountain meadows, hiking to cliff-side temples and meeting local communities in remote villages. Throughout their trip, they camped and stayed in basic three-star accommodations. Everything was included in their package.
“The lodges and food were pretty average, but that just added to the experience of being able to experience the real community and culture without the fake tourist treatment,” Ms. Petersen said. “What makes Bhutan so special is the kindness and spirituality of its people and their deep love and respect for nature and their land.”
Government officials say the previous policy discouraged additional out-of-pocket spending, as many travel agents would assemble their trip activities, food and other offerings to not exceed the $250 daily rate — the practice effectively turned the policy’s minimum rate into the maximum.
“The policy caused more misunderstandings than understanding and it has resulted in lowering the services that we are potentially able to offer,” said Prime Minister Lotay Tshering.
Under the revised tourism bill, which was passed by the Bhutanese parliament last month, Bhutan will be able to reinvest “in bringing up the quality of tourism products, especially in terms of training our guides, bettering the quality of our hotels, restaurants and food, while preserving the pristine environment that we have for generations to come,” the prime minister said.
One of the government’s main priorities, Dr. Tshering said, is to invest in waste management infrastructure and protect Bhutan’s biological corridors, nature parks and main cultural assets. Bhutan’s constitution mandates that 60 percent of the country’s land must be under forest cover and maintains strict laws to protect and uphold its carbon-negative status.
“This all costs money,” Dr. Tshering said.
‘Why fix something that is not broken?’
While Bhutanese travel representatives had expected some reforms to the country’s tourism policy, the threefold increase to the government’s sustainability tax came as a shock, with many fearing that the new model will turn tourists toward cheaper destinations at a time when the country is desperate for tourism dollars to boost its post-pandemic recovery.
Tourism revenue is a key contributor to Bhutan’s economy, making up 6 percent of the country’s gross domestic product. Some 29,000 tourists visited Bhutan in 2020 before the borders were shuttered in March of that year, and generated a revenue of $19 million. In 2019, 315,599 tourists visited, earning the tourism industry $225 million, according to the Tourism Council of Bhutan. The kingdom eased its travel restrictions earlier this year, allowing in foreign visitors on a case-by-case basis and requiring them to quarantine.
Tourism operators argue that the minimum package framework incentivized tourists by including all essential services.
“Everyone is asking, ‘why fix something that is not broken?’” said Lotay Rinchen, co-founder of the tourism company Bridge To Bhutan, Bespoke Mindful Journeys. It “protected the travel industry and ensured a certain level of quality and business,” he said of the prior system.
Mr. Rinchen was always in favor of increasing the price of the minimum fee. But without the requirement of the package structure, he says he anticipates the Bhutan brand will be harder to sell. He has started to explore the possibility of offering luxurious products to lure in tourists willing to pay the higher costs, like chic boutique lodges, wellness retreats and upscale glamping. Previously tourists could pay extra for high-end hotels like the Taj Tashi and Le Meridien Thimphu, but many chose the basic options included in the minimum daily fee package.
“This is not the right timing. Bhutan’s economy is in bad shape, and we had expected to open up tourism and start earning hard currency again, but this price hike will keep tourists away,” said Mr. Dorji of the Bhutan Travel Club, adding that the new model could attract a demographic of older sightseeing tourists who would “skim from one luxury hotel to another, without experiencing the Bhutanese way of life.”
The prime minister said that was not the government’s intention. “We want to make sure that we get a set of tourists who are intellectually high-standing, knowledgeable and conscious of our needs and unique features,” he said.
Elsa Foster, 44, an American personal trainer who lives in Scotland, took a mountain biking tour in Bhutan with a group of friends in 2018. After a day of sightseeing in Bhutan’s capital, Thimphu, they embarked on a seven-day off-roading adventure, cycling through remote mountain valleys and villages. Ms. Foster said it was very practical to have hotels booked by their tour agent as they stayed in a different location each night.
“I really liked how everything was organized and packaged with the old fee system, all you had to do was show up,” she said. “But to pay 200 bucks on top of all the other expenses, you’ve got to be pretty rich and it’s a shame that Bhutan will become inaccessible to young people who won’t be able to afford it.”
The government hopes the new policy will have the opposite effect, attracting a wider demographic. “All we mean is to welcome with a very open heart all individuals and potential visitors who want to visit and experience the uniqueness we have to offer,” Dr. Tshering said. “Then we will ensure that the visitor will get the value of the money that is spent in Bhutan.”
The United States was one of the top tourism markets for the kingdom before the pandemic, behind India and Bangladesh, with 13,016 Americans visiting in 2019 and spending an average of 10 nights, according to the Tourism Council of Bhutan.
Karma Tshering, an environmental conservation and ecotourism specialist, said the government should use the increased tourism tax to meet its sustainability goals, which could include investing in hiking trails, highway amenities and training and support to service providers.
He is worried that without the minimum-spend policy, “which helps our service providers obtain minimum revenue to support their services, our people will be left in the hands of the tourists to negotiate and bring down prices,” Mr. Tshering said, adding that there could be “a chain impact on delivering quality services and high-end experiences.”
Some sectors see an opportunity in the change. Sonam Wangchuk, chairman of the Hotel & Restaurant Association of Bhutan, said the amendment was long overdue and will bring positive change where all hotels and restaurants will have equal opportunity.
“I guess it is now the survival of the fittest, where one now needs to pull up their socks and become a go-getter,” he said. “The old days of business knocking at your door are gone, therefore the harder we work the more promising it will be.”
Chencho Dema contributed reporting from Kansas City, Mo.