Bhutan may revise its Sustainable Development Fee if travel picks up

Bhutan may reconsider its controversial $100 daily tourism fees if the country’s tourism industry recovers soon, Bhutan’s Prime Minister Tshering Tobgay told CNBC on May 10.

But the fees are likely to go higher, he said.

Bhutan reopened its borders in September 2022 with an increased “Sustainable Development Fee” of $200 per person per day in place. In 2023, the country lowered the fee to entice travelers to stay longer, before halving the fee across the board. 

The current daily fee — $100 for adults and $50 for children aged six to 12 — is described as a “time-limited incentive” valid until Aug. 31, 2027, according to Bhutan’s Department of Immigration.

But Tobgay indicated that the fee amount could change before that date.

“We’re going to have a quota of 300,000 tourists,” Tobgay said. “And if the demand to come into Bhutan to visit far outstrips our capacity to welcome them we might even have to increase sustainable fees at that time.”

“That will be a welcome development,” he added.

Bhutan’s tourism industry is recovering slower than other countries in Asia — a situation which Tobgay said he expects will quickly change.  

“The moment we start marketing our country and what is available … I think there will be a beeline to visit Bhutan,” he said.

Bhutan welcomed 315,599 international visitors in 2019, 73% of whom were from India, according to an annual report published by the Tourism Council of Bhutan.

Last year, the country welcomed around 130,000 tourists, Tobgay told CNBC.

Bhutan is targeting 300,000 tourist arrivals per year, half of which would be from “third countries” and “dollar-paying visitors,” according to a manifesto from Tobgay’s People’s Democratic Party.

Indian travelers pay a reduced fee of 1,200 Bhutanese ngultrum ($14.50) per night, and daytrippers from India are exempt from the fee, according to Bhutan’s Department of Immigration.

Before Bhutan closed its borders in March 2020 in response to the Covid-19 pandemic, travelers were required to pay a daily package rate that started at $200 per day. The rate often included hotel, transportation and tour guide costs, and the mandatory $65 Sustainable Development Fee.

Now, those costs are in addition to the $100 Sustainable Development Fee.

Tobgay acknowledged that the changes to Bhutan’s Sustainable Development Fees have caused “a lot of confusion.” Still, he said he’s confident the current rate of $100 will allow the country to meet its recovery goals very quickly.  

“Truth be told, I think $200 per day as a sustainable development fee many tourists are willing to pay,” he said, especially “when guests find out the proceeds from the Sustainable Development Fee are used to protect our natural environment, to provide free education and free health care to our citizens.”

“Most tourists are delighted that they can play a small part — a small meaningful part —  in the sustainable development of Bhutan,” Tobgay told CNBC.