Businesses in Phuentsholing struggle to rebound
Last Updated on February 16, 2025 6:33 am
Phuentsholing—Despite an uptick in the number of Indian tourists visiting Phuentsholing, local businesses in the country’s commercial hub are struggling to bounce back from the pandemic’s impact.
In a clear sign that Phuentsholing’s economy is still struggling to recover, hotels and other businesses report low customer footfall even during traditionally busy seasons.
This is despite the government waiving Sustainable Development Fee (SDF) for casual foreign visitors staying up to 24 hours in the border towns of Phuentsholing, Samtse, Gelephu, and Samdrupjongkhar.
Many business owners in Phuentsholing say this policy intervention has had minimal impact on their revenue.
Hotel operators point to rising operational costs, including high rent and inflation, as major challenges. Bhutanese businesses also face stiff competition from neighbouring Jaigaon town, where lower costs give Indian establishments a competitive edge.
“Our employees are free without much work even during the peak seasons. Even locals do not visit like before,” said one hotelier operating in the lower market area.
Another concern among budget hotel owners is the rise of discounted travel packages offered by overseas agents and certain star-rated hotels in Phuentsholing.
They believe these discounts divert cross-border tourists away from budget accommodations.
“When star-rated hotels offer discounts, cross-border tourists who would normally choose budget hotels obviously go for the standard ones,” said a budget hotel owner.
Meanwhile, a manager at a star-rated hotel defended saying discount offers during lean periods is a survival strategy.
“We don’t have much to say about how travel agents sell their packages if we are not affected, but collaboration between hoteliers and agents could lead to some other challenges,” added another hotelier.
The effects of the pandemic have forced some hoteliers to scale down their operations.
One hotel owner, who previously managed three establishments, now operates only two and continues to face challenges in paying employees on time.
“I usually adjust their pay before the 10th of the month to ensure the necessary rolling,” the owner said.
Others have resorted to using alternative income to pay their staff during lean periods.
Retail shops and restaurants are faring no better.
A woman who previously ran a restaurant was forced to close it due to a lack of customers. She later opened a liquor shop, but that venture also struggled.
Business owners blame higher taxes for driving up the cost of goods and services, making them less competitive compared to those in Jaigaon. “When taxes are high, it is only natural that we pass the cost onto customers,” a shopkeeper explained.
Rising rents further compound the problem, with rental prices increasing regardless of business performance.
Business owners attribute much of their struggles to higher taxes imposed by the government, which make goods and services in Bhutan more expensive than in Jaigaon.
Some business owners are contemplating converting hotel rooms into residential spaces to reduce losses.
Some argue that the lack of recreational facilities and other attractions within the prescribed boundary for day visitors limits visitor spending in Phuentsholing.
Strict regulatory controls at entry points are another barrier. Visitors who overstay the permitted 24-hour period face fines, discouraging repeat visits.
“Those entering for short-term durations are imposed fines when they get late at the exit point, which discourages them from visiting again,” said a local businessman.
With such challenges within Bhutan, consumer preferences have also shifted, with many Bhutanese choosing to shop or live in Jaigaon for convenience and lower costs.
“Many Bhutanese customers choose to reside in India for shopping convenience since frequent exit and entry at the gate is time-consuming,” said a local resident.
Several business owners are calling for a comprehensive recovery plan to revitalise border towns and attract tourists. Recommendations include enhancing recreational facilities and improving infrastructure to encourage longer stays and increased spending.
“The lack of a targeted recovery plan is holding businesses back,” a private-sector employee said. “Tourists used to stay for weeks before the pandemic. Now, even those visiting for 24 hours spend little because prices in Bhutan are higher than across the border.”