Out of 284 hotels that applied for the Economic Stimulus Programme loan interest subsidy, only 25 have qualified so far. While some hoteliers say the eligibility criteria have left many struggling businesses without support, the government says the subsidy is meant only for operational hotels in genuine financial distress because the fund is limited.
The selected hotels received more than Nu 7.2 M in interest support under the Nu 850 M ESP loan interest subsidy scheme.
According to the Royal Monetary Authority, five two-star, 16 three-star and 4 four-star hotels have been approved for the subsidy as of June. Fifteen of the approved hotels are in Thimphu, followed by four each in Paro and Chhukha, and two in Gelephu.
Under the programme, the government will pay four per cent of the loan interest, while financial institutions will cover an additional one per cent for one year starting next month.
To receive the subsidy, hotels must obtain a verification letter from the Department of Tourism. This requires a valid star certification, registration under the Tourism Registration System, and a valid business licence.
Hotels must also be operational and have an active loan repayment record.
However, during the Hotel and Restaurant Association of Bhutan’s special annual general meeting yesterday, some hotel owners questioned the eligibility criteria, saying many financially distressed hotels are unable to qualify for the subsidy.
Hotel owners say hotels were issued only technical clearance by the former Tourism Council of Bhutan, which they argue should also be accepted as proof of eligibility.
Chairman of Hotel and Restaurant Association of Bhutan Ugyen Tenzin said, “When we constructed our hotels, there was no Tourist Registration System (TRS) or anything similar. We only had the technical clearance issued by the then Tourism Council of Bhutan (TCB). Without considering this clearance, many other criteria have been included in the scheme. We have also informed the Director of the Department of Tourism. Why can’t the technical clearance be used as a supporting document to avail of the subsidy?”
“As many of us couldn’t pay back the majority of our loans, the subsidy support does not benefit us much,” said Lily Wangchuk, the founder and president of 33 Soksoom Centre for Well-Being & Happiness.
“Even if we try to avail ourselves of the subsidy, there are a lot of challenges. We have to get certified after an assessment by the DoT. Then, we have to actively register on the TRS. Only then will we have a chance to get the subsidy.”
According to the director of the tourism department, some hotels are not operational even if they have the technical clearance certificate; therefore, the certificate is not enough to get the ESP loan interest subsidy.
He added that the fund for the subsidy is limited, and only seriously distressed operational hotels are eligible for the subsidy. He said some non-operational hotels had applied for the subsidy. There are nearly 400 hotels in the country.
The government has already provided various support to hospitality sector since the pandemic, including loan deferments and a moratorium on repayments.
RMA data show that hotels had borrowed more than Nu 24.5bn across 1,113 loan accounts as of March this year. Three-star hotels alone accounted for Nu 17bn. However, more than Nu 400 M of these loans have since turned into non-performing loans.
Nearly Nu 9.2bn in loans across 178 accounts remain under deferment.
Kelzang Chhophyel & Sonam Yuden
Edited by Sangay Chezom
