With less than a year remaining before Bhutan’s current Sustainable Development Fee (SDF) arrangement expires, tourism businesses are calling on the government to provide early clarity on the levy that international visitors will pay beyond August 2027.
The present SDF of USD 100 per person per night for international tourists was introduced in 2023, when the government reduced the earlier USD 200 levy by half in an effort to support the tourism sector. The concessional rate was announced as a temporary measure and is scheduled to remain in force until August next year.
Three years after the reduction, tour operators say the USD 100 fee has become increasingly accepted by travellers and overseas partners. The immediate concern for the industry, therefore, is not simply the level at which the SDF is eventually fixed, but how soon the government makes its decision.
Kinley Gyeltshen, proprietor of Gangri Tours and Travels, said the initial introduction of the revised tourism policy had been met with considerable resistance, both within Bhutan and among international partners. Selling Bhutan as a destination had consequently become difficult. Over time, however, he said the market had adjusted and the present arrangement had largely stabilised.
That stability is particularly important as international tourist arrivals continue to recover. But uncertainty over the post-August 2027 fee is already making it difficult for operators to price and market future packages.
Tourism businesses point out that Bhutan, as a long-haul destination for many international travellers, is frequently booked several years in advance. Overseas travel companies are already preparing itineraries for 2029 and 2030, while Bhutanese operators cannot provide firm prices beyond the current SDF period.
Raju Rai, CEO of Heavenly Bhutan, said European travel markets often plan five or six years ahead. Some international partners are already accepting deposits for travel several years from now, he said, but uncertainty over Bhutan’s future SDF makes it difficult for local companies to provide comparable long-term costing.
The Association of Bhutanese Tour Operators (ABTO) has similarly called for sufficient lead time before any revision is introduced.
ABTO Executive Director Thuji Pem said packages for Bhutan are commonly sold two to three years before the actual date of travel. Any change in the SDF, she said, should therefore be communicated well in advance so that Bhutanese operators and their international partners have enough time to price and promote the destination effectively.
Industry representatives believe at least two years’ notice would help businesses manage any transition. The SDF forms a substantial part of the cost of a Bhutan holiday, meaning operators cannot reliably finalise future packages without knowing the applicable rate. At present, many businesses are able to provide firm pricing only until the summer of 2027.
The question of tourism levies is also being raised by businesses catering to Bhutan’s regional market.
Hoteliers are seeking a review of the Nu 1,200 SDF charged to regional tourists. A notification issued in 2022 had indicated that the rate would remain in effect for two years and could subsequently be reviewed and revised.
Bhutan has around 300 hotels in the three-star and lower categories, many of which depend heavily on regional visitors, particularly travellers from India. Despite an overall improvement in tourist arrivals, operators in this segment say occupancy and cash flow remain challenging.
Ugyen Dorji, proprietor of Hotel Ugyen, said regional travellers account for around 90 per cent of the guests at three-star and lower-category properties. International visitors paying the USD 100 SDF, on the other hand, tend to stay at four- and five-star hotels, leaving smaller properties with a much thinner share of the tourism recovery.
The Hotel and Restaurant Association of Bhutan has acknowledged that the post-pandemic SDF framework has helped attract more responsible and higher-value visitors, in keeping with Bhutan’s long-standing “high-value, low-volume” tourism approach. The challenge now is to balance that policy with the commercial realities faced by different sections of the industry.
The Business Regulatory Review Report 2026 has also proposed greater flexibility in the SDF structure. Among its recommendations is the possibility of offering lower fees or incentives to tourists who travel beyond the country’s most established destinations of Thimphu, Paro and Punakha.
Such a system could potentially use the SDF not only as a tourism levy but also as a tool to distribute visitors and tourism income more widely across the country.
The report has additionally called for the future SDF policy to be finalised, noting that greater certainty would help both domestic tourism businesses and international markets plan ahead.
For the industry, that certainty is becoming increasingly urgent. Decisions taken over the coming months will influence contracts, package prices and marketing campaigns extending several years beyond 2027.
Tour operators and hoteliers are therefore looking to the government for an early indication of whether the USD 100 international SDF will continue, be revised or be replaced by a more flexible structure.
With global travel companies already selling holidays years in advance, industry representatives say the longer the uncertainty persists, the harder it becomes for Bhutan to compete for future bookings. An early decision, they argue, would give businesses the time they need to price confidently, communicate with overseas partners and market Bhutan well beyond August 2027.
