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By Kezang Choden

Following repeated appeals from the hotel industry, the government is considering targeted financial support through the Economic Stimulus Program (ESP). The Ministry of Industry, Commerce and Employment (MoICE), in consultation with the Royal Monetary Authority (RMA), is currently assessing the feasibility of offering a four percent interest subsidy to hotels. The support would be granted based on defined eligibility criteria, similar to the assistance already provided to the manufacturing sector under ESP Window I (Business Reinvigoration Fund).

However, after months of consultation and review, the government had already announced a broader set of seven post-June loan restructuring and support measures on June 9, 2025. These are specifically designed to provide relief to the hotel sector.

The restructuring package offers flexibility for financial institutions to collaborate with individual hotels on tailored repayment plans. Additionally, financial institutions are exploring options such as interest rate reductions to further ease the financial burden on hotel operators.

The Hotel and Restaurant Association of Bhutan (HRAB) is currently reviewing the seven restructuring measures to assess which options align best with the varying needs of hotels across different categories. Their feedback will help the government determine whether further targeted interventions, including the proposed ESP interest subsidy, are necessary and effective.

Kuenzang Thinley, Vice Chairman of HRAB, said the government’s proposal to extend a four percent interest subsidy is a significant relief for hoteliers. He described the announcement as โ€œbig newsโ€ for the struggling industry and highlighted that financial support would be particularly helpful for hotels that have faced serious challenges since the COVID-19 pandemic.

โ€œMany hotels suffered heavily during and after the pandemic,โ€ he said. โ€œSome were even unable to carry out necessary renovations or maintain their operations due to a lack of funds.โ€

The interest subsidy, which is still under review by MoICE and the RMA, is expected to support the recovery and reinvigoration of the sector. If implemented, it will operate similarly to the assistance provided to the manufacturing sector under ESP Window I. The hospitality industry has long called for targeted assistance, citing issues such as low occupancy rates, loan repayment pressures, and slow post-pandemic recovery.

HRAB expressed hope that the proposed financial measure will help restore investor confidence and enable hoteliers to upgrade their facilities, improve service quality, and create more employment opportunities in the tourism sector.
In a related development, the ministry is preparing to launch the Tourist Registration System (TRS), a digital platform designed to address longstanding inefficiencies in the tourism sector. The TRS will collect real-time data on tourist movements, accommodation trends, occupancy rates, and the use of tourism infrastructure. The system is expected to reduce revenue leakages, address underreporting of room occupancy, and enable better identification of hotels facing genuine financial difficulties.

Kuenzang Thinley explained that lowering interest costs would reduce the monthly loan repayment burden on hotel owners. This, he said, would allow hotels to retain more cash, which is critical for sustaining day-to-day operations and planning for future investments.

โ€œWith the interest burden coming down, hotels will be in a better position to manage their finances. It will lead to increased profitability, which means the reserves and surplus of many hotels will improve,โ€ he said.
He further noted that the financial support would provide a timely boost to the hotel industry and help accelerate its recovery. Retained earnings could be used for maintenance, facility upgrades, and possible expansion, thereby strengthening the overall hospitality sector.

The government has stated that any new intervention must complement the existing loan restructuring measures. The aim remains to provide lasting solutions to the hotel industryโ€™s repayment challenges and contribute to a more resilient and sustainable tourism sector.

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