15/08/2021
HIGH-VALUE LOW VOLUME TOURISM
Dorji Dhradhul, Director General of Tourism Council of Bhutan discusses the unique tourism policy and practice of the Kingdom of Bhutan highlighting the continued and increased relevance of our tourism model in a world that is confronted with challenges of climate change and the COVID-19 pandemic.
1. What is our tourism policy?
Our tourism started in the early 1970s with the tourism policy of ‘High-value Low volume’. Today, a half-century later, we are awestruck with the profoundness and farsightedness of this policy. It is indeed a precious gift from His Majesty The Fourth Druk Gyalpo to the world of tourism.
“…with Drukgyal Zhipa at the helm, we had the confidence to make our own decisions- to decide that our approach to tourism policy would be that of high value low volume. It seemed counter-intuitive at a time when tourists to Bhutan were so few. There were many skeptics. But because of that policy, Brand Bhutan emerged. And you see the results of that policy for yourselves today.”- His Majesty The King, 11th Convocation of the Royal University of Bhutan, 2016
I like to add that this policy is timeless for many reasons, one being that this policy will continue to be relevant for all times to come, in other words, the goal of High-value Low volume is meant for a chase and not a catch.
2. What is High-value?
Targeting mindful and responsible tourist; Offering good value for money experiences; Ensuring high revenue and yield per capita tourist; Ensuring quality tourism infrastructure and products and services; Upholding Brand Bhutan.
Most importantly, High-value refers to the exclusive experience by the tourist.
3. What is Low volume?
Low volume guides the number of tourists Bhutan receives is consistent with the absorptive carrying capacity of our natural endowment, socio-cultural values, and infrastructure and does not exacerbate the vulnerabilities as a small nation. While Low volume is invariably associated with value-driven model, it does not necessarily limit the numbers.
4. Have we achieved High-value?
The pursuance of High-value is a journey and not a destination. And if we refer to the Minimum Daily Package Rate (MDPR), we may not have achieved it, as some tours are being offered at lower than the prescribed MDPR. Besides, the ‘minimum’ rate set by MDPR to promote High-value is used as ‘maximum’ without putting effort to offer tours at a premium value by developing innovative and ‘value for money experiences.
The present set rate of USD 250 per person per day for a package including a minimum of three-star accommodation, meals, chauffeured SUV, dedicated certified tour guides cannot be considered as expensive when a simple room could cost nothing less than USD 100 in the developed countries.
From a tourist’s perspective, MDPR is considered as premium price and therefore expects commensurate higher standard services. While the quality and standards of our services were not a serious issue in the past, but post-COVID-19 it will be, as tourists will be more demanding and discerning in their choices of a travel destination than ever before.
Bhutan not being overrun by tourists will be always a core characteristic of High-value experience.
5. Have we achieved low volume?
As the Low volume is associated with High-value, it was not achieved in pre-COVID-19 era. A few years before COVID-19, due to the mal-practice of undercutting and two kinds of tourism tariffs, viz. MDPR and Non-MDPR, the arrivals were not always pegged to High-value. However, post-COVID-19, this situation is expected to improve with the implementation of some new regulations including the levy of the concessional sustainable development fee (SDF) to the regional tourists.
6. What is the volume that we can accept when we say ‘Low volume’?
The acceptable volume as “Low volume” can be defined in the context of carrying capacity of a destination and the capability to ensure quality services provision. The key areas that have to be considered are culture, environment, infrastructure and society and how much changes these can accept or take in.
Therefore, the Low volume does not have a fixed number of tourists allowed in a year, but rather could be dynamic and change with the carrying capacity.
7. Can High-value be achieved with Low volume?
YES through the following:
Not practicing the undercutting (offering tour packages at a rate lower than set MDPR)
Increasing spending avenues - Improving and increasing spending infrastructure like the POS outlets; increase the offer on more interesting souvenirs and another niche products; increase more avenues to engage tourists (café, food street, adventure sports, agro-tourism)
Increase the average length of stay (products, open up other areas)
Innovation and creativity in packages and experiences for tourists.
High standard tourism facilities and infrastructure
8. What are MDPR and MDP?
MDPR is a tourism pricing system. Under MDPR, a tour has to be pre-booked and pre-paid. At present, the MDPR is USD 250 for high season and USD 200 for the low season.
MDPR is an effective tool to regulate and manage tourist arrivals. The arrival number can be increased or decreased depending on the destination’s carrying capacity.
And MDP is the minimum service that will be offered for the price paid. MDP includes the following:
Accommodation and Meals (3-star standard)
Tour guide (full time)
Ground transport (full time)
Sustainable Development Fee of USD 65
9. Is there a way for High-value without MDPR?
Yes, but it has to fulfill the following pre-requisite conditions.
Self-regulated minimum industry-led standards and classification systems for the tourism services e.g. there should be no hotels below a certain standard.
Proper accounting systems and digitalization.
High level of business ethics and integrity
Minimum pricing standards as per the service standard/living standard
Strong and effective monitoring practice
These pre-requisites are characteristics of a first-world country and the minimum requirement is ensured mostly through a self-regulated system. Under such a condition, MDPR will be no more relevant or necessary to ensure High-value.
High-value is not only about bringing in more hard currency and revenue for the country. It is also about ensuring value for money and giving an exclusive experience to visitors. It is about ensuring sustainable development of tourism, thereby ensuring the benefits from tourism to the future generation.
10. Do all foreign visitors pay MPDR?
No, the only tourist pays the MDPR and other foreign visitors can visit Bhutan as official guests, personal guests, students, work and business, etc. However, as of now, tourists from Bangladesh, India, and the Maldives have to pay only the SDF component of the MDPR is presently fixed at a concessional rate of Nu.1200 per tourist per day.
Tourism policy has a target to achieve one tourist system by 2030, which means all tourists without exception will be under the same system.
11. Is our tourism policy of High-value Low volume an elitist?
I don’t think so. High-value Low volume tourism is Bhutan’s choice guided by the development philosophy of GNH and also for the larger objective of pursuing the global interest of a sustainable earth.
And on a different perspective, the reality is that not everyone will have access to the same travel experiences and opportunities. It is just like a case of the door to heaven being open to all, but not everyone can go to heaven as one should have earned minimum merit by doing some good when living. More recently, Anita Menderatta, Advisor to the SG of UNWTO said, “Tourism is not a right but a privilege.”
12. Is MDPR restricting out-of-pocket spending?
MDPR should not in any way discourage or restrict out-of-pocket spending. In fact, we have tourists spending more than USD 1000 per day.
However, at the present the spending avenue is limited, e.g. limited choice of souvenirs, poor imported quality of souvenirs, limited activities to engage tourists such as café, food street, entertainment, and theme parks, museum, library, adventure sports, etc. The spending opportunity can be also expanded with efficient POS outlets accepting foreign credit cards.
13. Can Bhutan be considered an expensive destination?
MDPR is wrongly interpreted as visa fee, therefore considered as very expensive to travel to Bhutan. This is due to a miscommunication that the MDPR is a fee for a tourist visa. On the contrary, the MDPR taking care of all charges for a full 3-star board and lodge, dedicated tour guide, dedicated chauffeured SUV for transport and sustainable development fee make travel to Bhutan quite cheap.
14. Is it very difficult to get a tourist visa?
Another misconception is that it is very difficult to get a tourist visa to Bhutan. This is absolutely not true, meaning a visa can be availed as easily as in any other country. In fact in Bhutan, the Bhutanese tour operator arrange visas for their tourists. The visa fee is USD 40 only.
15. Is MDPR outdated?
On the contrary, many destinations and travel thought leaders are acknowledging and recommending our unique tourism pricing system of MDPR and SDF as the tourism model in post-Covid-19 era.
Apparently, the search for a sustainable tourism approach has begun long before Covid-19. Destinations across the world are looking for a different tourism model that could address or avoid the negative impacts associated with over-tourism and or mass tourism and our model blessed by the High-value Low volume tourism policy is one of the favorites.
16. How does our tourism compare with others?
Any form of comparison and short-term gains driven ambition like other destinations across the world is futile and needless. The uniqueness and exclusivity are Bhutan tourism’s identity and strength. Because of our tourism policy of High-value Low volume, Bhutan as a tourist destination will be always uniquely Different.
17. When will Bhutan re-open tourism?
This is the most FAQ these days. However, we all know that re-opening of tourism would depend on the COVID-19 situation in our country, in our neighboring countries, and the world at large. So we all got to play our part right and pray for the best. Let's hope that we can reopen tourism soon.
Stay Safe and Help others to stay safe by wearing a mask, washing hands, maintaining social distance and get vaccination.
