KINZANG DORJI TSHERING
Thimphu
The Ministry of Industry, Commerce and Employment (MoICE), in collaboration with the Royal Monetary Authority (RMA), is assessing the possibility of extending a 4% interest subsidy to hotels under the Economic Stimulus Program (ESP), as pressure mounts from the tourism sector to be included in the relief measures currently offered to manufacture businesses.
Namgay Dorji, Minister for MoICE during the meet the press session held on 1st August, said that discussions around the feasibility of including hotels in the subsidized loan scheme have been ongoing. The proposalโmodelled on the existing Business Reinvigoration Fund under ESP Window Iโaims to offer financial breathing room for hotels severely impacted by the downturn in tourist arrivals and post-pandemic economic challenges.
While hoteliers had anticipated an outcome following a scheduled MoICE-RMA meeting on July 14, the Ministry clarified that no final decision has been made. Instead, the government has already implemented a wider set of interventions. On June 9, 2025, it announced seven comprehensive post-June loan restructuring and support measures, specifically targeting the hotel industry.
โThese seven measures are designed to provide flexibility to financial institutions (FIs) to work with individual hotels in designing restructuring and repayment plans suited to their capacity,โ Lyonpo said. โThis flexibility includes scope for interest rate reductions and other forms of financial relief.โ
The announcement followed months of consultations between government agencies, financial institutions, and representatives from the Hotel and Restaurant Association of Bhutan (HRAB). The HRAB is currently analyzing the seven measures to determine which are most appropriate for various hotel categories across the country.
These measures are seen as an interim solution while the government explores the necessity and effectiveness of targeted subsidies like the proposed 4% interest ESP loan for hotels. The review of these broad-based measures will help inform the government whether further interventions are needed, or whether the existing tools are sufficient to stabilize the sector.
In addition to the financial interventions, the Ministry is also preparing to roll out a Tourist Registration System (TRS)โa digital platform aimed at streamlining tourist data and minimizing leakages in tourism revenue. The TRS is expected to bring transparency to the sector by tracking tourist movements, hotel occupancy rates, and infrastructure usage across the country.
Persistent issues such as under-declaration of occupancy and unverified claims of financial distress by hotels have hindered the governmentโs ability to design evidence-based support. MoICE believes that with accurate, real-time data from the TRS, such inefficiencies will be significantly reduced, enabling better targeting of subsidies and policy responses.
โWithout robust data, itโs difficult to identify which hotels are genuinely in need of support,โ a source close to the Ministry said. โThe TRS will be a game-changer in understanding the actual demand-supply dynamics of tourism sector.โ
Despite these developments, hotel owners continue to express concern over unresolved loan deferral issues. While the temporary deferrals introduced during the pandemic helped keep many establishments afloat, the post-deferral period has exposed long-standing vulnerabilities in the sectorโmany of which are structural rather than temporary.
Stakeholders have warned that without more sustained interventions, including concessional financing or longer-term restructuring, many mid-range and budget hotels could face bankruptcy. Some hoteliers have argued that the high cost of borrowing and operational overheads remain a significant barrier to recovery, especially with tourist arrivals still well below pre-pandemic levels.
The MoICE maintains that any additional intervention, including the potential ESP subsidy, must align with existing support systems and not create overlaps or inefficiencies. โOur goal is to ensure that public resources are deployed where they can create the most sustainable and equitable impact,โ the official noted.
As the HRAB continues its consultations and the TRS nears implementation, the government is expected to revisit the subsidy question in the coming months, once clearer data on hotel performance and needs becomes available. For now, the MoICE encourages hotels to take full advantage of the restructuring options already on the table and to work closely with their respective financial institutions.
While the 4% interest subsidy remains under consideration, it is just one of several tools being explored to assist Bhutanโs vital but vulnerable hotel sector in its path to long-term resilience.
