Colombo, August 4: The Ministry of Industry, Commerce and Employment (MoICE), in coordination with the Royal Monetary Authority (RMA), is reviewing a proposal to offer a 4% interest subsidy to hotels as part of Bhutan’s Economic Stimulus Program (ESP). The move follows sustained pressure from the tourism sector to be included in relief measures already extended to manufacturing industries.
MoICE Minister Namgay Dorji, speaking during a press session on August 1, confirmed that the idea is under serious evaluation. The proposed subsidy would be modelled on ESP Window I’s Business Reinvigoration Fund, and is meant to ease the financial strain faced by hotels grappling with sluggish tourist arrivals and lingering post-pandemic disruptions.
Despite expectations for a decision after the July 14 MoICE-RMA meeting, no final call has been made. However, the government has already implemented seven post-June loan restructuring and support measures, announced on June 9, specifically tailored for the hotel industry.
“These measures give financial institutions the flexibility to negotiate restructuring plans that suit each hotel’s repayment capacity,” said Lyonpo. This includes room for interest rate reductions and tailored repayment timelines.
Consultations with the Hotel and Restaurant Association of Bhutan (HRAB) are ongoing to determine which of the seven measures best fit the diverse range of hotels—from luxury resorts to small guesthouses.
Government Cautious About Targeted Subsidies
The 4% subsidy remains on the table as a potential tool, but officials say its rollout will depend on the effectiveness of current interventions. The goal is to avoid policy overlap and ensure that public funds are used efficiently.
To that end, the government is also preparing to launch a Tourist Registration System (TRS), a digital platform designed to improve data accuracy on tourist movements, hotel occupancy, and infrastructure usage.
Persistent issues like under-declared occupancy and unverified financial distress claims have made it difficult for MoICE to target relief effectively. The TRS aims to change that by offering real-time, verifiable data across the tourism ecosystem.
“Without reliable data, we can’t know which hotels actually need help,” said a source familiar with the initiative. “The TRS will be central to identifying true need and designing smarter policy.”
Loan Pressure, Structural Weaknesses Remain
Despite ongoing interventions, hoteliers remain uneasy. The expiry of pandemic-era loan deferrals has exposed longstanding vulnerabilities—particularly among mid-range and budget hotels. Many say that high interest rates and fixed overheads continue to squeeze margins, even as tourism struggles to return to pre-COVID levels.
Some stakeholders are urging the government to consider longer-term restructuring options, or access to concessional financing, especially for smaller players in the industry.
Government officials maintain that any new support must complement existing tools, not duplicate them. “We’re committed to making sure public resources go where they’ll have the greatest long-term impact,” one MoICE representative said.
In the short term, hotels are encouraged to fully engage with their financial institutions to take advantage of the available restructuring framework.
For now, the 4% subsidy remains under review, and is just one piece of a broader effort to help Bhutan’s tourism-dependent economy find its footing again.