Bhutan explains why it slashed daily fee

THIMPHU, Bhutan, 29 August 2023: In a statement forwarded to TTRW Monday, the Royal Government of Bhutan confirmed that “incentives and policy measures to boost its tourism sector” are being introduced, including a 50% reduction on its tourism levy, known as the daily Sustainable Development Fee (SDF). 

See TTRW news on Monday on the fee reduction: https://www.ttrweekly.com/site/2023/08/bhutan-cuts-fees-to-revive-tourism/

Bhutan’s government statement underscored the commitment to high-value, low-volume tourism while reducing the SDF to USD100 per person per night (down from USD 200 per person per night). The new, lower levy will be valid until September 2027.

“The change was made given the important role of the tourism sector in generating employment; earning foreign exchange; realising the potential for spillover benefits for ancillary industries; boosting overall economic growth; and funding important environmental, social and infrastructure projects,” the government statement explained.

New incentives and measures 

1. A 50% reduction will be granted on the prevailing SDF of USD200 for US Dollar-paying guests visiting Bhutan. The effective SDF with the discount will be USD100 per person per night for US dollar-paying tourists.

2. A 50% reduction on the SDF will be granted on the rates applied to children aged between 6 and 12 years for US dollar-paying children visiting as tourists. The effective SDF with the discount for children will be USD50 per person per night for US dollar-paying tourists. Children who have not turned six can visit Bhutan without paying any SDF.

3. The 24-hour SDF waiver for tourists staying in the border towns remains valid.

The above incentives are effective from Friday, 1 September 2023 and shall remain effective for four years until 31 August 2027.

Any guests who have already paid the SDF for their upcoming visit to Bhutan are eligible for refunds on any excess SDF amounts paid.

Commenting on the incentives, Bhutan’s Department of Tourism director-general Dorji Dhradhul said: “While the global community continues to heal from the impacts of the Covid-19 pandemic, the conflict persisting in Europe, and the challenges related to the cost of living that are impacting important markets for us, we have listened to the voices of our valued guests, as well as our colleagues in the industry and our global travel partners.

 “As a result, we have decided to temporarily lower our Sustainable Development Fee (SDF) to revitalise our tourism sector. We acknowledge the necessity of embracing change and occasionally refining our policies and strategies to match prevailing market conditions better. The lower SDF represents an excellent opportunity for more people to visit our beautiful kingdom in the future, which will benefit our people and the many projects that the SDF funds.” 

Bhutan started welcoming foreign tourists in 1974, and guests to Bhutan have always been required to pay a Sustainable Development Fee as part of Bhutan’s ‘High Value, Low Volume’ tourism policy. Funds from the SDF go to the government exchequer and are invested in a range of projects designed to support Bhutan’s preservation and progress and ensure that Bhutan avoids becoming a mass tourism destination. The projects funded by the SDF include the provision of free healthcare and education for all Bhutanese, a range of sustainability and conservation projects, cultural preservation programmes, infrastructure upgrades and youth development programmes. 

Since January 2023, Bhutan has welcomed 60,000 guests (including USD and INR paying tourists), which matches what was forecasted for 2023 arrivals. Bhutan’s main source markets are India, the US, the UK, Australia, Germany, Malaysia, France, Singapore, Vietnam and China. Bhutan’s tourism is expected to rebound to pre-pandemic levels in 2025.

Last June, Bhutan announced other incentives designed to help stimulate the tourism sector. These have now been revoked with the introduction of the new 50% incentive.