Hotels rated four-star and below that are certified by the Department of Tourism are set to receive temporary relief on their existing loans, as the government rolls out an interest subsidy aimed at easing financial pressure on businesses still recovering from the impacts of the COVID-19 pandemic.
Under the initiative, eligible hotels will benefit from a total interest reduction of around five per cent for one year. The government will shoulder a four per cent subsidy, while banks, in coordination with the Royal Monetary Authority (RMA), will provide a minimum additional one per cent reduction.
The programme will be funded through Nu 850 million allocated from the Economic Stimulus Programme, according to the Ministry of Industry, Commerce and Employment (MoICE).
Industry, Commerce and Employment Minister Namgyal Dorji clarified that the scheme does not involve the issuance of new government loans. Instead, it is designed to reduce the cost of servicing existing debt.
“This is not a new loan from the government,” the minister said. “Hotels already have loans and are paying interest on them. What the government is doing is providing a four per cent subsidy on that interest to help reduce their financial burden.”
He added that the RMA is working closely with commercial banks to ensure that they contribute the remaining one per cent reduction, bringing total relief to approximately five per cent for qualifying borrowers.
The support is intended not only to stabilise hotel operations but also to encourage reinvestment in service quality and employment.
“Hotels are expected to use the savings to improve their services and create more jobs,” the minister said, noting that such reinvestment would contribute to the broader recovery of the tourism sector.
Tourism remains a key employer in the country. According to the 2024 Labour Force Survey, accommodation and food service activities employ more than 17,000 people nationwide. The sector was among the hardest hit during the pandemic, with prolonged border closures and limited visitor arrivals leading to sharp revenue losses.
There are approximately 240 Department of Tourism–certified hotels rated four-star and below across Bhutan. However, not all will be eligible for the subsidy.
Hotels with Fixed Equated Instalment Facility (FEIF) accounts, non-performing or charged-off loans, bridge or concessional COVID-19 loans, and loans under litigation are excluded from the scheme. Authorities may, however, assess certain cases on an individual basis, particularly where borrowers have continued to make repayments despite financial difficulty.
Higher-end establishments—specifically five- and six-star hotels—are also excluded. The government considers these properties to be more financially resilient and better positioned to access commercial financing.
As of September last year, outstanding loans owed by hoteliers to financial institutions stood at nearly Nu 12 billion, highlighting the scale of indebtedness within the sector.
The RMA’s involvement is expected to ensure smooth coordination with banks and consistent application of the subsidy across institutions. Detailed operational guidelines are being finalised as banks prepare to implement the reductions.
Meanwhile, BBS has not yet received a response from the Hotel and Restaurant Association of Bhutan regarding the announcement.
The interest subsidy forms part of a wider set of measures under the Economic Stimulus Programme aimed at supporting private sector recovery, protecting jobs, and strengthening key industries as the country works to rebuild momentum in tourism and related services.
