September 23, 2022 is the official day of the resumption of tourism in after the pandemic. The country just removed the 5-day quarantine period and citizens can now enter with just a test at the airport. The rules however completely change how tourism works in Bhutan.
The Previous Model had Problems
From 1974 until 2021, you needed to book an all-inclusive package tour from a local operator with a minimum payment of between $200 to $250 per person per night. The tour operator was responsible for arranging the hotels, the guide, the transportation, and the hotel for you. The tour operator sent the sustainable development fee (SDF) $65/day to the government.
For groups with more than 4 people, the minimum daily price was often quite high compared to the expenses. This lead to a very large profit margin for the tour operator (which is great for the operators). We compensated for the excess money by providing free room upgrades, free food upgrades in better restaurants, free souvenirs and upgrades on flights to business class. Most operators either just pocketed the difference or went the illegal direction and simply lowered the price below the minimum daily tariff.
Tourists also wanted lower costs. We offered free white-water rafting to one group, and they said they just wanted a cheaper package and went with somebody offering that option.
Ultimately everybody in the entire tourism industry chain suffered. The tourists paid their money and the tour operator just picked their favorite hotel provides. The hotels and restaurants suffered because they were being forced to offer cut-throat prices to the local operators to try and get at least some business. Tour operators playing by the rules lost out to those operators running their undercutting games.
The New Rules
Under the new tourism rule, visitors will pay $200/day per person to be given a visa. Tourist will apply directly on the government’s website. It is not clear if the tour operator will be able to apply on the tourist’s behalf.
Once the SDF fee has been paid and the visa has been received, the tourist can do whatever they want. The tourist could ask tour operator to arrange the tours. The tourist could also just get on the plane and pick up a taxi at the airport in Paro figuring out their trip as they go.
We are hopeful that many tourists will still want to travel on packaged tours to simplify their trip. We use tour packages frequently ourselves when venturing to a new country where we’ve not ventured before.
Bhutan has always been known as an expensive destination and will this change make it even more expensive? In general, the cost will be a higher. We reworked some of our package prices to include the new SDF fee and we see increases between 20% and 40% for the visitors.
Bhutan Peak Adventure will continue to exist at least in the short term. We will have to determine whether guests are interested in using a full service agent or will be booking their accommodations directly.