A sustainable development tax of $200 per person, per night in Bhutan will dissuade foreign tourists from lower-income nations and shorten the lengths of stay for tourists from higher-income countries.

Bhutan’s international borders have been closed for more than two years and its tourism tax was already expensive at $65 prior to the pandemic. The country, on the other hand, plans to open its international borders to tourism in September 2022 and impose a $200 sustainable development tax per person per night. This will make it the world’s highest tourism tax.

Bhutan’s decision will deter tourists from lower-income countries

A greater tax would place an economic strain on those from lower-income nations wanting to visit Bhutan. This will reduce the number of tourists at a time when the tourism industry is still rebuilding. Furthermore, tourists from higher-income nations will shorten their stay to save money, resulting in little to no revenue for the local community. According to GlobalData’s Q3 2021 consumer survey, 58% of global respondents see ‘affordability’ as a key decision-making factor in their travel plans. This tariff on sustainable development might put off financially conscious tourists.

The top two source markets for Bhutan are India and Bangladesh. Both of these countries’ middle-class populations are growing, but because of Covid-19, travellers from these countries are anxious about their economic status. Because of the increasing tourism tax, travellers from these countries will reconsider visiting Bhutan, potentially dealing a significant blow to inbound visitor numbers.

Bhutan should change its approach to sustainable development

Bhutan is currently focusing on a ‘high value, less-volume tourism’ strategy, restricting the number of tourists to limit the impact on its traditional culture while maintaining tourism revenue. However, this will slow the tourism recovery because India and Bangladesh, Bhutan’s top two source markets, are still struggling as a result of the pandemic, which has cut the disposable income of many travellers.

Furthermore, western source markets such as the United States, the UK, and the Eurozone are wrestling with a cost-of-living crisis, and this is impacting consumer confidence. Increasing the cost of a trip is also likely to deter would-be travellers from these markets.

Bhutan should pursue a new strategy for sustainable development such as limiting longer stays or imposing greater fees after a specific number of days in the nation, rather than imposing higher taxes from the start. A new technique could help tourism recover faster.