Bhutan's US$100 question: what 'high value, low volume' means now

From package tariff to nightly levy

Bhutan opened to international tourism in 1974 ¹⁹. For roughly three decades, dollar-paying visitors paid a Sustainable Development Fee (SDF) of US$65 a night ⁵, under a government-set Minimum Daily Package Rate of US$250 ⁴. The arrangement became shorthand for 'high value, low volume'. Writing in The Caravan, a Royal Thimphu College lecturer and a former student note, however, that after 2008 the elected government reframed the policy as 'high value, low impact', and that growth came overwhelmingly from regional visitors, who paid no daily fee: on their figures, regional arrivals rose from 16,418 in 2011 to 202,290 in 2018, against 71,807 from other countries in 2018 ¹⁶. In 2019 Bhutan received about 315,600 visitors ⁵.

In 2020 legislators approved a daily fee of 1,200 ngultrum or rupees for regional tourists from India, Bangladesh and the Maldives ¹⁸. The pandemic closed the borders first; in June 2022 the Prime Minister said that fee had never been implemented ⁴.

The 2022 reset

The Tourism Levy Act of Bhutan 2022 set the SDF at US$200 per night, exempted children aged five and under, set a 50% rate for children aged six to twelve, and allowed the competent authority to grant exemptions or concessionary rates; the Act itself can be amended only by Parliament ². The National Assembly adopted it in June 2022 ³. When the country reopened on 23 September 2022 ⁵, the Minimum Daily Package Rate was scrapped and visitors could book services directly rather than only through packaged tours ¹.

The justification was as much economic as environmental. The Bhutanese reported the Prime Minister arguing that the package model was not delivering high value because operators undercut the minimum rate, that it was not creating well-paid jobs, and that the 1991 fee had been eroded by inflation ⁴. Officials said the revenue would fund carbon-neutral and sustainable tourism activities such as carbon offsetting and worker training ¹.

Two retreats in a year

The higher rate met resistance from operators, hoteliers and handicraft sellers, who reported lost bookings and income ¹¹. The first response, approved by cabinet on 30 May 2023, kept US$200 but waived nights for longer stays — pay four nights and receive up to four free, seven plus seven, or twelve plus eighteen — for stays until the end of 2024 ⁶. Within three months that scheme was revoked and replaced ⁹ by a 50% discount for dollar-paying visitors, bringing the effective fee to US$100 per night from 1 September 2023 to 31 August 2027. The government said that after that date it 'may' discontinue the incentive following periodic assessment ⁷⁸. Reuters reported SDF revenue of US$13.5 million from nearly 60,000 visitors between January and August 2023 ¹¹.

Other concessions sit alongside the discount: a 24-hour waiver for stays in four border towns, in place since April 2023; waivers for meetings and conference events from January 2024 ⁷; and, from June 2024, a US$15 rate for the first 15,000 Bangladeshi visitors each year, valid until 2027 ¹⁰. Indian nationals pay 1,200 ngultrum or rupees per night ¹².

Legally, the statutory rate therefore remains US$200 and US$100 is a time-limited concession. In May 2026 the National Assembly's Economic and Finance Committee recommended reviewing the 2022 Act and aligning the SDF with the legislation. The Ministry of Industry, Commerce and Employment replied that US$100 supports high-value tourism and market stability, and that seasonal or group discounts would weaken the brand; the House nonetheless directed the government to reassess SDF adjustments, proposed extending the border waiver to 72 hours and asked for a progress report at its next session ¹⁵. The tourism department had said in February 2025 that its Integrated Tourism Master Plan 2025–2034 would not change the fee structure ¹⁷. As of October 2026 we found no published decision on what will apply after 31 August 2027.

What the numbers show

Arrivals have recovered, though not to 2019 levels: 103,068 in 2023 ¹⁵, 145,065 in 2024 and 209,376 in 2025 ¹³¹⁴. SDF collections rose from US$29.35 million in 2024 to US$43.31 million in 2025, according to the ministry; the figure covers the fee only, not wider visitor spending ¹³.

The mix matters more than the total. About 62% of 2025 arrivals were Indian and about 38% came from other countries ¹³. On those percentages, roughly 80,000 visitors came from outside India in 2025 — our calculation, and a group that includes Bangladeshi visitors, who were counted as regional before 2022. That compares with the roughly 70,000 dollar-paying tourists the Prime Minister cited in 2022 ⁴ and 71,807 arrivals from outside the region in 2018 ¹⁶. Arrivals from outside India, in other words, appear to have recovered faster than the total, which remains about a third below 2019. At the master plan's launch, officials set an aim of balancing SDF-paying and Indian visitor numbers by 2026 ¹⁷; the 2025 split suggests that was still some way off.

Where the money goes

This is the least documented part of the policy. The 2022 Act describes the levy as a contribution towards sustainable development initiatives undertaken by the government; we found no earmarking provision in its English text ². A Nation Thailand report in August 2026 states that SDF receipts are deposited, with other taxes and levies, into the government's Consolidated Account, which funds ordinary operations and development programmes ¹². Official descriptions of what that pays for are broad: free healthcare and education, forest and wildlife conservation, infrastructure and the restoration of dzongs ¹²¹⁹. In 2023 officials also cited electric transport and offsetting visitors' carbon through tree planting and trail maintenance ¹¹.

We could not find published accounts tracing any of these to SDF receipts. Because the fee is pooled, there is no public ledger linking a visitor's nightly payment to a particular forest patrol, clinic or restored monument. General-revenue treatment is common and avoids rigid earmarks, but it means statements that the SDF 'funds' specific outcomes are first-party descriptions rather than documented allocations.

Bhutan is often cited as proof that a high fee protects a destination. The record is more modest. In four years the fee has been tripled, effectively halved and supplemented with waivers; the government describes the discount as revisable; and the 2026 parliamentary debate was about whether the fee serves regional development, not whether it is high enough. What is documented is that fee revenue is rising, that international arrivals have returned faster than the total, and that a decision due by August 2027 will show what 'high value' means in practice.