High value

“Magic!” is how tourists often describe their visits to Bhutan. Druk Air, dzongs, monasteries, farm houses, forests, gho and kira, red rice, mask dances, traffic policemen, archery, Mahayana, GNH, the people … anything and everything Bhutanese completely captivates the visitor. What tourists also love is the exclusiveness of a visit to Bhutan.

So it’s no wonder that, despite the global recession, the tourism industry has continued to perform well. But there is one big danger. McKinsey. The international consulting firm has already recommended increasing tourist arrivals to about 250,000 a year within three to five years. That’s five times what ABTO has projected. And, more than 10 times the number of tourists that would have visited Bhutan this year.

Yes, we need more tourists. But not that much. And, not so quickly. It’s easy to increase the number of tourists. But if we do, we risk losing that magic tourists so often associate with Bhutan.

 

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  1. Dear OL

    Please don’t worry – the McKinsey are feeding us US$9.1 Million worth of horse shit. They damn well know that the current infrastructure cannot support such tourist inflow. Despite that, it is amazing that they still go about touting that ridiculous figure. They must take us for fools.

    I too agree that we need increased tourist arrivals – but not by such dramatic leaps and bounds. The issue is not just of infrastructure that needs to be created to support such deluge, but the need to preserve the “mystique” that is Bhutan today. Without this “mystique”, we are nothing.

    The DPT government must also realize that increasing tourist inflow so suddenly so fast will bring huge pressure on our environment. With barely few thousand trekkers currently trekking our country side, we have such serious problem of waste management. Imagine what will happen to our country side if thousands upon thousands of tourists were to be admitted.

    I hope the NEC and the Park authorities will make sure that the government will be responsible enough to know that what the McKinsey is proposing will be counter productive in the long run.

    We must remember that to be able to support such tourist arrivals, we need to:

    1. Make it more affordable for the tourists to visit Bhutan. This means that we need to reduce royalty and tariff. Bad idea! – this will invite the back-packing lot of tourists which we don’t need.

    2. We need to upgrade infrastructure – increase hotel rooms in all the tourist spots; improve on our services, increase carrying capacity of the Druk Air etc. We cannot do it all in the short period that the McKinsey is talking about. Lets not talk of the FDI – they have come up with some weird ideas there too.

    I do not understand: why must we be allowed to be hoodwinked by the Americans time after time? First it was the Beninger Architronics and now it seems like we are being had by the McKinsey. But in case of Mckinsey, I hope that they have better ideas in other areas – other than tourism which I can see is a disastrous proposal.

  2. I appreciate the “Magic” tourists so often associate with Bhutan.
    It is always heart warming to know that our Country is loved by all.
    My associates often call me ‘The Happy Guy’ because I am from the “Happy Country” and I smile often. They press me for the secret of my Happiness. I simply tell them; “Bhutanese upbringing, guys, Bhutanese upbringing.”

    In the mean time.. don’t let Tourists alone decide how Bhutan should evolve. Bhutan is not a zoo!

  3. It may be “magical” for some tourists but not all tourists. Some say it’s “utter waste of money”. And it is definitely not “magical” for our common people like you and I, if you consider yourself a commoner that is. We are all struggling to survive everyday in this “magical” country where even the principle of our devlopment is “magical”.

    However, tourism is not all bad. It will be very good for our country provided:

    1.it remains a “small volume, high quality eco-friendly tourism”. The point is clear per se.

    2.the taxation system of the tourism industry in our country is reformed. The tourist tax is very low in our country. I know this point needs some elaboration and so please allow me to speak in raw terms so that the point is made clear and unsophisticated, and because I am going to talk about something that our tour operators don’t dare to talk about and our people are ignorant.

    Tourism is like selling our country. Say, a tourist visiting our country at our present tourist rate pays US$ 100 to visit our country. He comes in and watch us as if we are monkeys in the zoos, takes our pictures and goes back home feeling like he has just seen some exotic human species living in the himalayas. Then the tour operator deducts about US$70 as part of his expenses. Actually his expenses is just about US$ 20 which leaves him a profit of US$ 50. From the other US$ 30 taxable amount, the government levies a 30% tax which comes to about US$ 10. This leaves a gross profit of US$ 50+ US$ 20= US$ 70 for the tour operator. In short, a tourist pays 100 dollars and our government gets just about 20dollars from it. The rest are all gone into private pockets-the very obvious reason why tourism is flourishing in our country. The tax is very low and this is the underlying reason why we have more than “two hundred” legally registered tour operators in such a small country. Can you believe that??? There is a definitely a gold rush! It is simple common sense that the tour operators will definitely want to increase the number of tourists coming into Bhutan every year. They will, as someone said above, “feed” us millions of dollars. We just need to define more clearly and be more specific about the word “us” in that phrase. If this “us: is really our country and our people, that’s OK but I am afraid this “us” is a “super super subset” of “our
    country and our people”.If our tourism industry continues to doing business as it is doing now, and our government turns a blind eye and do not reform the taxation policies, in the long term, the quality of our tourism industry will deteriorate. Our country will be sold for the benefit of a handful of people who we see are getting richer and richer and closer to attaining GNH everyday. The rest of us are doomed to act like living “atsaras” for the tourists!

    • Tangba -I am sure you are capable of much more reasoning than what is just spurted out carelessly. Tourist’s coming to Bhutan pay a sum of US$ 180 per day and not US$ 100. The government royalty is about 35% on that (I think), the BIT or CIT is then levied at 30% on gross profit, the standard hotels charge about US$ 50 minimum per room, the guides expense is about US$ 15 minimum depedning on the quality of guides used, the average food component comes to about US% 47 per day, the museum & institutions that charge fees end up to about US$ 12 per day, the transportation charge comes to about US$ 43 per day average, TDF US$ 10 per visit per tourists deducted which often is not paind by the tourists, besides there are farm house visit expenses, tips to restaurants & hotels, cultural programs to add value etc etc are all included in the package of US$ 180 charged per tourists. So do your math now and see how you derive the profit you derived.

      Your facts are also way outdated on the number of tour operators. It is 600+ now and not merely 200. This is in your favor in terms of numbers to argue BUT you also have to go to TCB and see the statistics that barely 150 or so operate. Many have licenses as a hobby to usher in their friends from abroad. It is not a gold rush – it is entrepreneurship, people are trying in the trying times of high unemployments. You say taxes are minimal – I would say it is adequate but need to relax in some areas to encourage growth of entrepreneurship to contribute meaningfully to the economy by the govt. allowing to establishing good broad base. You have it all mixed up when you say tour operators are nearing GNH with ample money accumulation but that logic is just wrong. Re-visit the essence of what GNH is all about and come again. I think ATSARAS certainly have a higher index of GNH than the TO’s.

      On the other hand, I agree with you and some others that Bhutan should always maintain high value low volume tourism policy. Mckinsey study should be welcomed but the ultimate decision should be ours. We take what is good and leave out what we feel is not relevant. I also believe that 250000 tourists within a few years is a mind boggling number for Bhutan and the Bhutanese. It is just not justifiable. Should that happen – it will happen at the cost of lowering the tourism tariff, allowing back packers in the country. There will be erosion & dilution of culture, tradition & environment which are the very reason for tourists wanting to visit Bhutan. We may have success in the begining but the future is bleak with such attempts. The golden goose will be vanquished.

      Have Mckinsey considered the seasonality of tourism in Bhutan. What proposals are they coming up with to combat this situation. We don’t need proposals or advise to promote our festivals or the peak trekking months but the problem is the lean months that need immediate attention. During these months – Hotels are empty, transporters are idle, guides & trekking staffs are unemployed, restaurants are dry, handicrafts are strewn with dust and government museums are haunted. Who is responsible in correcting this situation. Is it the responsibility of the tour operators or is it the government (TCB) that should wake up and do more. Who is acting, who is listening, who is watching & observing. It is no secret – everyone knows the problem but no one is adressing it. Does Mckinsey have an answer or a proposal.

      • Mr Romeo, thank for your comment but please do me a favour. Before you comment on someone’s article, read it well or don’t read it at all.

        In my first argument, I began my paragraph with the word “Say”. If you are a careful reader, you will definitely understand what that means. It means “for example”, or it can mean an ” if”. That is not an exact figure and I don’t want to argue with you about it either because neither of us work in the TAB.

        In my second argument, I wrote “more than two hundred” tour operators. If you have some brain in your cranium, this could mean 300, 400, 500, 600, even 1000 tour operators and “not merely 200”.

        What a waste of my time, yaar!!!

      • Tangba la,
        Thank you – no more arguments. It did give me an opportunity to voice my personal opinion in this forum. Is is a spin off from your comment. You did a big favor and you did gain merit from it. I may not have read between the lines carefully. Thank you and PEACE. I wish I was working for TAB as I wanna contribute meaningfully for the development of tourism not not merely warm a seat there. You ahve brains and I don’t. Thats the difference. Smile now….

      • Cheers Romeo, you are a good man. Keep up the humility. It will do you good.

      • I still feel your calculation is way off and you have some ill will against the tour operators. I am a good woman and romeo is my husband.

  4. Developing tourism is definitly one big potential for Bhutanese economy; but how it should develop and to what extent it should develop, i think, government has to exercise lot of wisdom. It is good to listen to consultancy firm like Mackinsey but ultimate decision must be left to us. I totally agree that tourist volume as suggested by Mackinsey (if it is true)will put enormous pressure on our environment, infrastructures and more importantly, on our way of life and culture. I hope the present Government is capable of making right decision for the long term interest and sustanability of Bhutanese society.

    If i am given a choice between rapid economic progress at the cost of cultural, environment, and societal degeneration and slow but development at our own pace with intact nature, culture and harmonious society, then i will opt out for the latter choice.

    Cheers

  5. When McKinsey came up with that magic figure there must have been relevant variables gone into the math. I don’t think the figure came out of blue from nowhere.

    Unless we know this, the debate does not seem to be taking us anywhere.

    I am, as well, alarmed with such an ambitious and seemingly ridiculous figure.

  6. hahaha….Romeo…that was a PJ

  7. The figure definitely looks magical! It is a very reasonable figure for Bhutan to target during the next 5-6 years, that is, cumulatively. I really do not see the mad rush to have everything cooked and eaten within the next 3 years or within the tenure of the present government. An practical and implementable road map or master plan developed with clear and achievable mile stones would be appreciated so that successive governments could implement them, with minor adjustments, if necessary.

    I personally do not see the mad rush out of synch with the reality.

  8. Do we have the infrastructure and superstructure for such a number? Simple thinking – with that number – it seems that our roads (no, the road – east west highway) will be clogged with tourists travelling – many of them walking – since we have only 42,000 vehicles in the country – nearly half of them two wheelers.

    Does the plans include national blue print to stagger the visits of each individual group of travellers and is there a big plans to develop the infrastucture to that level within 3 years? in both the ways, it would be a record since more than 300 tour operators’s plans would be overseen or what has been achieved in three decades would be superceded in 3 years.

    Or maybe I am just a frog in the pond but hard to imagine 250,000 tourists for a country with 6,35,000 people, almost one highway (narrow one), 42000 vehicles (half of them usable), two aircrafts?

    Maybe there is a way to stagger. But free market would not bring needed infra & super structures before – and if taxation is right, maybe afterwards.

  9. Véronique says:

    Dear Guest. I’m a french tourist and I’m totally agree with you. Your country is very magic and we pay a lot of money to learn about you. You can bring us a lot, but if you have to much tourists you lost your soul.
    When I think about your futur, I’m affraid, because it must be very difficult at this time to preserve your own culture,
    your fabulous nature, the ecological farming : to preserve all we destroy ourself in ourland.
    I wish your government and the young bhutanse can do what we was not able to do.
    Dear Tangba we have in Paris a lot of tourist and we never think they watch us as if we are monkeys in the zoos, do you do so when visit another country ?
    Sorry for my bad english.

  10. I have been watching this thread and I am surprised why nobody is asking the question that must be asked.

    1. Why McKinsey?
    2. How McKinsey?
    3. Why do our “government” have to hire a private consulting company to lay down its “national” strategies?
    4. Was the resolution to hire McKinsey passed by the parliament?
    5. Was there any other competing consultancy firm? Why didn’t they qualify? 6. Why did our government choose this firm and not others? On what basis?
    7. Who will be responsible if the McKinsey
    firm bring disaster to our country? Jigme Y. Thinley? Or the DPT? Or the parliament?

    Honorable OL, you must enquire and let the people know. We are waiting for your reply.
    *******************************************

    I know people here must have researched information about this McKinsey. I have copied down some excerpts from wikepedia. Please read if you have not.

    1. Anil Kumar, 51, of Santa Clara, California, a director at McKinsey & Co. Inc arrested in insider trading corruption scheme on 10/16/2009 – Ref:Larry Neumeister, Associated Press Writer
    2. Misguided analysis, such as its recommendation in 1980 to AT&T that cellular phones would be a niche market[12]
    3. Overemphasis on shareholder value, often at the price of investment and long-term strategy. For example, this may have doomed the British railway company Railtrack, which collapsed after a series of accidents, allegedly after following McKinsey’s advice to reduce spending on infrastructure and return cash to shareholders instead.[13][14]
    4. Concerns from teachers and parents regarding their consultation for public school districts. Recently, McKinsey worked for the Minneapolis Public Schools, where the firm recommended that the district cut “high costs,” such as teacher health care, and recommended converting the 25 percent of schools that scored the lowest on standardized tests to privatized charter-school status (a plan under which schools receiving public funds are run by independent charter associations, or for-profit entities, and operate outside the authority of local school boards). Teachers in Seattle passed a resolution of non-compliance with McKinsey’s study of the Seattle Public Schools in protest of their record of favoring privatization, high-stakes testing, and other tactics associated with the No Child Left Behind Act.[15]
    5. Partially responsible for the demise of Swissair after they recommended The Hunter Strategy
    6. Among other books and articles, The Witch Doctors, written by The Economist journalists John Micklethwait and Adrian Wooldridge, presents a series of blunders and disasters alleged to have been McKinsey’s consultants’ fault. Similarly, Dangerous Company: The Consulting Powerhouses and the Businesses They Save and Ruin by James O’Shea and Charles Madigan critically examines McKinsey’s work within the context of the consulting industry.
    7. McKinsey is cited in a February 2007 CNN article with developing controversial car insurance company practices used by State Farm and Allstate in the mid-1990s to avoid paying claims involving a soft tissue injury. This is done, the article alleges, because these types of injuries are hard to verify by X-ray or other common examination methods other than surgery.[16]
    8. Former British Prime Minister Tony Blair faced criticism in the Financial Times for hiring McKinsey to consult on the restructuring of the Cabinet Office. A top civil servant described McKinsey as “people who come in and use PowerPoint to state the bleeding obvious.”[17]
    9.McKinsey is a named defendant in Hurricane Katrina litigation. Louisiana Attorney General Charles Foti’s suit accuses McKinsey of being the “architect” of sweeping changes in the insurance industry, starting in the 1980s. The suit alleges McKinsey advised insurers to “stop ‘premium leakage’ by undervaluing claims using the tactics of deny, delay, and defend.

  11. Well, I went through Mckinsey web and found their ideas appealing especially concerning business development; but like many things in web things could be deceptive. I personally do not have much knowledge on this firm; but simply beleived in our Government who hired this firm to accelerate economic development in Bhutan. I guess this is the case with many Bhutanese who seem to have faith and beleive in whoever is running the show (Government). If what Tangba is true we may have to find out why government hired this firm? By the way, is it not late to question the government for hiring this firm??

    Cheers

  12. McKinsey has been around for a long time and are the best Management Consultants in the world. They have produced the most number of fortune 500 CEOs and leaders and they have delivered huge transformational changes to many companies and nations. If you see their track record, you will only be impressed.

    Tangba is obviously erring on the side of coonfirmational bias .. looking for evidences to establish a pre-established conclusion. It is good to question but certain objectivity is required.

    And of course all of us are given to talking at times as if we have fools in our Government. I am sure the Government knows what we want..and knowing that I am pretty sure McKinsey will deliver and make it happen. The details for the changes in the tourism sector currently in the open is not substantial enough to rail against McKinsey or the Government.

    • Hello Bhutanse Blogger,

      I am not saying there are stupid people in our government but I am afraid there are really some arrogant people in the government who will not care what other people think once they are in power, for example, our PM Jigme Y Thinley. See, even on the objection of the Election Commission that the CDG will be unconstitutional, the government led by Jigme Y Thinley is openly ignoring the warning. If he can do such things openly, I have enough reasons to be cynical about why he chose the McKinsey and not other firms, and why they did not conduct an “open floor” discussion in the parliament about the issue. If it was in other country, Jigme Y Thinley will be impeached for breaching the constitution. But what to do, this is Bhutan and that is why I am afraid about.

      Peace out.

  13. apologies for the error there – coonfirmational bias = confirmation bias

  14. Hi all,
    I heard that Mckinsey is a good firm and I can see that they are no nonsense firm. Theya re regularly meeting the stake holders to consult and discuss situations before they bring out thier analysis. As many have mentioned earlier, the end decision is ours to take and not theirs. They are paind well to research and I hear they do a good job. I have heard that they were involved in successful transition and development of Medical tourism in various countries and some of the POPULAR SERVICES PROMOTED AT OVERSEAS CENTERS are
    South Korea: cancer treatment, implants, cosmetic surgery
    India: heart surgery, knee transplant, cosmetic surgery, dental care
    Thailand: cosmetic surgery, dental care, orthopedic surgery, general surgery
    Singapore: joint replacements, cardiac surgery, cancer treatment
    Mexico: dental care
    Australia: cosmetic surgery

    All these are going well elsewhere and WONDER WHAT IS IN STORE FOR BHUTAN BESIDES THE REGULAR CULTURAL & TREKKING TOURS. WE WOULD BE INTERESTED IN MORE OF SUCH SPECIFIC PRODUCTS TO BE DEVELOPED THAN JUST THROWING US NUMBERS OF 2,50,000 VISITORS IN NEXT 3-5 YEARS. CAN’T BUY INTO THAT…. WE NEED TO SEE & HEAR MORE DETAILS FROM KCKINSEY SOONER THAN LATER.

    • Romeo, hello once again.

      More than hearing from the McKinsey group, I would like to hear from our government why they chose this firm in the first place. We have the right to know why, what and how the government thinks. So far, every one knows McKinsey but no one knows why McKinsey. You have got any idea about it? And have you ever had a second thought why to hire a foreign consultant group in the first place? Can’t we devise our own plan and execute them without spending US$ 5million just to hire a foreign firm to do the job that we think we can do it ourselves? What is the rationale behind? Mind you, US$ 2 million is just their consultancy fee which is equivalent to about Ngultrum 80 million! Nobody is talking about this. All people are talking about the good ideas of McKinsey but their ideas for me seems to be very expensive for my country. With this amount, I think we can develop a whole dzongkhag. What say thoust?

      Cheers.

      • please correct it’s 2million dollars spaaning over the whole period of the hire and not 5million dollars….this information from an insider.

  15. With 250,000 tourists a year, the magic will be lost. Bhutan’s selling point is it’s exclusivity which will definitely be lost. Not a good idea.

  16. From my side Hiring McKinsey is not good idea. Main concern is our environmennt.Secondly its going against GNH . The amount to hire the consultancy firm is big joke to our nation like Bhutan. To handle 250,000 tourists a year its not joke.. you need to have infrastructure.Secondly TCB office will like McKinsey office. Bhutan should be like way we are were before..low volume high qulity = high profit=GNH

  17. given the government budget i dont think developing infrastructure to accomadate around 250 to 300 thousand tourist in the next few years is a resonable target.

Trackbacks

  1. […] This policy has proven itself. We continue to enjoy the rewards of tourism (government revenue, jobs and international attention) without sacrificing our culture, our environment, and our way of life. Equally important, our tourists swear, time and time again, that their experience in Bhutan has been nothing short of pure magic. […]

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