Bhutan Faces Hotel Crisis: The Challenge Of Excess Capacity Amid Declining Tourist Numbers

Published on September 13, 2025

Bhutan, a state renowned for its breathtaking Himalayan scenery, lively culture, and accent connected Gross National Happiness (GNH), is presently facing a superior situation successful its edifice sector. The federation is dealing pinch nan conundrum of excessively galore beds and not capable visitors, moreover though nan number of hotels has accrued recently. Due to nan pandemic and nan sluggish tourism betterment that followed, galore hotels are now operating astatine unsustainable debased occupancy rates; immoderate are hardly making ends meet aliases paying disconnected mounting debt.

With occupancy rates falling and galore edifice owners concerned astir nan future, nan situation is becoming much and much obvious. Although nan Bhutanese authorities has implemented caller policies successful an effort to reside nan crisis, striking a equilibrium betwixt biology sustainability and economical maturation continues to beryllium a awesome obstacle. The existent mobility is whether Bhutan’s tourism assemblage tin retrieve from this setback, and if it can, what plans will beryllium put successful spot to make judge nan manufacture is resilient and profitable successful nan years to come.

An Oversaturated Market

Between 2019 and 2025, Bhutan saw a melodramatic summation successful nan number of hotels, arsenic nan assemblage grew rapidly. From conscionable 160 hotels successful 2019, nan number much than doubled, reaching complete 400 by 2025. This description was mostly fuelled by optimism surrounding nan tourism industry’s early maturation and nan government’s encouragement of backstage assemblage finance successful nan hospitality sector. During nan pandemic, galore investors were eager to capitalise connected nan post-pandemic recreation boom, believing that Bhutan’s unsocial allure would pull visitors successful ample numbers.

However, nan reality has proven to beryllium acold much complicated. Despite first projections of a tourism resurgence, nan manufacture has yet to return to pre-pandemic levels. Tourist arrivals successful Bhutan person importantly decreased, falling from complete 315,000 visitors successful 2019 to conscionable complete 115,000 successful 2025. As a result, nan edifice industry, particularly successful celebrated tourer hotspots for illustration Thimphu, Paro, and Punakha, is experiencing a terrible oversupply of accommodations, pinch excessively galore rooms disposable and not capable visitors to capable them.

The Financial Strain connected Hoteliers

The accelerated summation successful nan number of hotels has had unintended consequences. With less visitors visiting Bhutan, galore hotels are struggling to support profitability. The rising number of unoccupied rooms intends that hoteliers are uncovering it progressively difficult to screen operational costs, fto unsocial make immoderate important profit. This has led to galore establishments, peculiarly smaller, locally owned hotels, facing nan grim reality of mounting debts and financial losses.

Several hoteliers person expressed concerns astir their inability to proceed operating astatine these debased occupancy rates. They are burdened pinch high-interest loans, which were taken to money nan description of their businesses during nan pandemic. The business has been further exacerbated by precocious operating costs, including electricity, staffing, and maintenance, each of which proceed sloppy of nan number of guests staying successful nan hotel.

In ray of these challenges, nan Hotel and Restaurant Association of Bhutan (HRAB) has lobbied for financial relief, proposing a simplification successful nan liking rates connected loans for hoteliers. The relation has besides advocated for authorities involution to trim operational costs and amended trading strategies to bring much visitors to Bhutan. However, nan financial struggles wrong nan manufacture cannot beryllium solved solely by short-term financial assistance. There must beryllium a broad strategy to reconstruct Bhutan’s image arsenic a premier recreation destination while ensuring nan sustainability of nan tourism assemblage successful nan agelong run.

The Government’s Response: New Tourism Policies

Recognising nan urgent request to reside nan increasing crisis, nan Bhutanese authorities has taken steps to present caller tourism policies aimed astatine restoring nan wellness of nan tourism sector. These policies are intended to equilibrium economical maturation pinch nan preservation of Bhutan’s taste and biology integrity, which has ever been a halfway worth of nan country.

The caller tourism argumentation includes regulations designed to power nan number of hotels entering nan marketplace and to beforehand high-quality tourism experiences alternatively than simply expanding nan number of accommodations. It besides intends to promote nan improvement of sustainable tourism that benefits section communities while mitigating nan biology effect of over-tourism. By promoting niche tourism sectors for illustration eco-tourism and taste tourism, nan authorities hopes to pull a much discerning type of traveller, consenting to salary a premium for unsocial and responsible recreation experiences.

Additionally, nan authorities has emphasised nan value of integer trading and online platforms to heighten Bhutan’s visibility successful nan world tourism market. By leveraging technology, Bhutan hopes to create targeted campaigns to pull visitors from countries that are presently under-represented successful its visitant demographics, specified arsenic those from Southeast Asia and nan Middle East. While these measures are promising, they will return clip to output results and will require collaboration pinch backstage stakeholders successful nan tourism manufacture to beryllium effective.

Moving Toward Sustainable Tourism

Bhutan’s tourism manufacture has ever been founded connected nan principles of sustainability. In keeping pinch its accuracy of Gross National Happiness, Bhutan has prioritised preserving its earthy beauty, wildlife, and civilization for early generations. The situation now is to reconcile this accuracy pinch nan modern demands of a quickly increasing hospitality sector.

Sustainable tourism practices will beryllium basal successful nan coming years. Bhutan must proceed to pull visitors while besides ensuring that nan maturation of nan tourism assemblage does not negatively effect its vulnerable situation aliases overburden its communities. Sustainable tourism, which focuses connected minimal biology effect and nan use of section populations, will require a important displacement successful nan industry’s attack to maturation and development.

To execute this, nan authorities will apt request to present policies that limit nan number of visitors visiting nan state each year, arsenic portion of a deliberate effort to debar nan benignant of over-tourism that has plagued different celebrated destinations astir nan world. This tin beryllium achieved by focusing connected high-value visitors, who enactment longer and walk more, alternatively than simply expanding nan number of arrivals.

A Path Forward for Bhutan’s Hotel Industry

The edifice situation successful Bhutan serves arsenic a informing to nan recreation manufacture astir nan perils of unbridled maturation that disregards user demand. The manufacture will request to return a much sustainable and strategical attack arsenic it attempts to recover. Bhutan tin guarantee that its edifice assemblage continues to play a important domiciled successful its system without sacrificing nan qualities that make it a unique and appealing recreation destination by emphasising top-notch tourism experiences, enhancing trading tactics, and protecting its unique taste and biology resources.

The government’s efforts, coupled pinch industry-wide practice and committedness to sustainability, connection dream for a agleam early for Bhutan’s edifice sector. However, nan roadworthy to betterment will beryllium agelong and challenging, and it will require observant readying and collaboration crossed each levels of authorities and manufacture to reconstruct equilibrium and guarantee semipermanent success.

[Image Source: Bhutan Travel Bureau Official Website]