Bhutan's three-star hotel sector is facing financial hardship, with hoteliers planning to petition the government to reconsider the current tourism fee structure — replacing the daily Sustainable Development Fee (SDF) with a one-time visa fee for tourists.
Occupancy rates have dropped dramatically year-over-year, with many establishments operating below 10 percent capacity. Tourist arrivals declined to 95,633 as of September, down from 103,066 the previous year. Indian tourists, a primary clientele for mid-range hotels, are discouraged by the current daily fees.
Hotel owners have proposed a one-time visa fee instead of daily charges, arguing this would encourage tourists to stay longer and boost regional competitiveness. Additional recommendations include mandatory direct bank transfers for overseas agent payments and construction moratoriums in already-popular destinations.
Monthly hotel revenues of Nu 200,000–300,000 barely cover operational costs, with loan deferments extended only through June 2025 — underscoring the urgency hoteliers feel around reforming the fee structure.