With nearly Nu 12bn still left to be repaid by the hoteliers to the financial institutions, they are seeking additional support, including another deferment and ESP loans, among others. The Hotel and Restaurant Association (HRAB) presented five recommendations to financial institutions in a consultation meeting today. Following the end of the loan deferment period in June this year, the central bank released seven measures to support hoteliers in repaying their loans. This support scheme ends this month.
While the central bank’s measures have provided the hoteliers with flexibility in repaying loans, they have recommended some changes to it.
The recommendations are repayment deferments, capitalisation into Fixed Equated Instalment Facility or FEIF accounts, concessional ESP loans, loan splitting and maturity extensions.
To secure support from the government, the association submitted a proposal to the Office of the Cabinet Affairs and Strategic Coordination seeking ESP loan support.
“With the release of the seven measures from the RMA and the loan repayment period nearing its end, we have discussed among ourselves, and today we have consulted with the CEOs of the banks. We have proposed a 4 per cent loan interest repayment by the government through the ESP, and we relayed the same message here,” said Ugyen Tenzin, Chairman, Hotel and Restaurant Association of Bhutan.
The association said the tourism industry is recovering. But the hotel occupancy and revenue remain low, with an increasing number of hotels and tourist arrivals still below pre-pandemic levels. This, the association said, is making loan repayment unsustainable.
According to a report presented to financial institutions, the association highlighted that while the number of tourist hotels has increased from 160 in 2019 to over 400 this year, the number of tourist arrivals has not reached even half of the pre-pandemic levels. 2019 saw over 315,000 tourists visiting Bhutan, while last year recorded a little over 145,000.
According to the association, the numbers are not picking up due to the Sustainable Development Fees (SDF), high airfare and monument fees, which make Bhutan an expensive destination in the region.
“The issue for the hotels nowadays is the lack of guests. This hinders our revenue generation, and we cannot pay the loans back. So, the association have been appealing to the government to provide discounts on the SDF to the tourists depending on how long they stay and how big the group is. It is not to completely do away with the SDF,” said Ugyen Tenzin, Chairman, Hotel and Restaurant Association of Bhutan.
If the government’s ESP loan support is secured, the association plans to submit a list of the severely affected hotels to the government.
Kelzang Chhophyel
Edited by Kipchu
