The National Council’s Economic Affairs Committee’s Review Report on the State of Tourism in Bhutan that highlighted operational challenges, regional disparities, and the need for targeted policy reforms.

Phuentsholing, a hub which handles over 60% of tourist entries, faces congestion, limited staffing, and lacks a dedicated tourism office. Tour operators in the town have urged the government to extend the current 24-hour Sustainable Development Fee (SDF) waiver to 72 hours to boost the local economy and redefine Phuentsholing’s role beyond being a transit point.

Immigration and police authorities called for improved coordination and infrastructure, citing unpredictability in immigration policies, limited digital integration, and lack of training for frontline staff.

In central Bhutan, officials in Bumthang and Mongar emphasized untapped opportunities in cultural and eco-tourism. Bumthang, once a top tourist destination, now struggles due to limited investment and restrictive cultural rules. Mongar aims to develop as a hub for birdwatching and spiritual tourism but is constrained by limited data, manpower, and lack of regional tour packages.

Eastern dzongkhags, such as Trashigang, Trashiyangtse, and Samdrup Jongkhar pointed out long-standing regional inequalities in tourism benefits. Despite rich cultural assets, poor accessibility and inadequate facilities deter tourists. Stakeholders recommended better marketing, inter-dzongkhag travel packages, and the development of trekking routes and homestays.

Industry associations also expressed concern. The Association of Bhutanese Tour Operators (ABTO) stressed the need for inclusive policymaking and region-specific tourism programs. The Guide Association of Bhutan (GAB) raised issues regarding subsistence allowances, professional standards, and proposed a structured development program for guides. The Hotel and Restaurant Association of Bhutan (HRAB) highlighted post-pandemic recovery issues, including low occupancy and inconsistent service standards, calling for improved branding and digital payment systems.

The Economic Affairs Committee reviewing the tourism sector noted several critical observations. These include inadequate stakeholder involvement in policy-making, lack of product diversity and marketing, and unequal regional distribution of tourists concentrated mostly in western Bhutan due to proximity to main entry points. The hotel industry faces financial distress, and the discontinuation of the Minimum Daily Package Rate (MDPR) and associated Tax Deducted at Source (TDS) system has raised concerns about tax compliance. The report found that Bhutan’s tourism sector, despite its strong contributions to GDP and employment, risks long-term instability without structural reforms.

To address these challenges, the Committee recommends strengthening stakeholder engagement, supporting authentic rural tourism experiences, and introducing duration-based SDF waivers to encourage longer tourist stays and promote regional travel. It also recommends improving accessibility by enhancing domestic flight reliability and upgrading roads and border infrastructure. Given the severe financial strain in the hotel sector, the Committee calls for targeted loan restructuring to support economic recovery and employment retention. Additionally, it proposes the development of an integrated online system to improve income tracking and tax compliance, as well as discontinuing the airfare subsidy due to its limited impact. Finally, the Committee urges stronger enforcement against fronting and foreign ownership in the sector.

With tourism contributing over 51% to GDP and employing 42% of Bhutan’s workforce, stakeholders agree that the “High Value, Low Volume” policy must be implemented in a way that is inclusive, regionally balanced, and responsive to on-the-ground realities.