Too Many Hotels and Fewer Visitors Put Bhutan’s Tourism Industry Under Pressure
Bhutan’s hotel industry is facing a serious problem. There are 8,625 hotel rooms across the country, but only about 20 percent of them are being used. Hoteliers say they need at least half of their rooms filled to cover costs, but some hotels have had no guests for months.
From January to August 2025, only 115,536 tourists visited Bhutan. This is far below the 180,000 visitors per month needed to fill all the hotels. In August alone, 10,010 tourists came to the country, which is about one guest per hotel for the whole month. The government is hoping to attract 250,000 tourists by the end of the year.
The problem is worst for three-star hotels. There are 202 of these hotels in Bhutan, mostly serving Indian visitors. They face competition from high-end hotels, homestays, and unregulated rentals. Many have had to reduce their prices. Some three-star hotels now charge only Nu 2,500 per night, including meals.
Tourist numbers have not yet returned to the levels before the pandemic. Bhutan had 315,599 visitors in 2019, but only 145,065 in 2022, 103,066 in 2023, and just over 115,000 in the first eight months of 2025. Most tourists come from India and usually stay for four to five days.
Officials at the Department of Tourism (DoT) say the oversupply of hotels is a big problem, especially in western Bhutan, while other areas still lack enough accommodation. To help, the DoT started the Tourist Registration System (TRS) to track hotel bookings more accurately. They have also removed 19 three-star hotels that did not meet the required standards.
The oversupply problem started partly because of past government policies. Between 2010 and 2015, tax breaks and incentives encouraged many people to build hotels. Even though a temporary ban on new hotel loans was introduced in 2023, the sector is still struggling with the effects of too many hotels.
Hoteliers also complain about other issues. Some tour operators ask tourists to arrange visas on their own and pay cash, which reduces government revenue. Overseas operators sometimes set hotel prices too low, forcing local hotels to lower their rates too.
Despite these challenges, the DoT sees some positive signs. Tourist arrivals increased by 51.8 percent in 2024 and by 18.6 percent in the first half of 2025 compared to last year. The department continues to monitor hotels and transport services to maintain quality and support the industry.
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