April-June 2009

Looking at how poor households could better benefit from the growth of the tourism industry in Bhutan, the Tourism Council of Bhutan (TCB) and SNV Bhutan (SNV) embarked on an assessment of tourism-related industry sub-sectors. The 25 days assessment spread over the months of April, May and June 2009 took place in Paro. Given the successes of tourism development in Paro Dzongkhag, this area was chosen to focus program attention and activities initially. Further successes here could lead to replication elsewhere.

The assessment included the selection and analyses of value chains (industry sub-sectors) and the determination of appropriate facilitation activities which could support private-sector development in the industry and create positive impacts for the poor. Initially seven tourism-related value chains were considered. Based on secondary and primary information collected, the TCB/SNV research team assisted by Action for Enterprise, a consultancy firm with expertise in doing value chain analysis, selected two value chains with the greatest growth potential and the greatest potential to impact on the target population (poor households in Bhutan). Selected were the Fresh Vegetable and Herbs value chain along with the Accommodations value chain.

Fresh Vegetables and Herbs Value Chain:

Given the increasing number of tourists, the demand for fresh vegetables and herbs in hotels and restaurants in Paro is also increasing. Although most produce is currently imported from India, the preference remains for local, fresh produce which typically has fewer chemicals applied during cultivation.

About 95% of the population in Bhutan is engaged in agricultural activities. Although most are engaged in the cultivation of grain (i.e., rice, corn, barley, etc.), many farmers are also growing an increasing number of vegetables. The main constraint of vegetable farmers however, is accessing stable and dependable markets before their fresh produce spoils. In part this is due to a lack of information of what the market needs and when.

The Team thus identified and prioritized the following two most commercially viable (or market-based) solutions:

• Access to stable and dependable markets for farmers.
• Access to market demand information for farmers (regarding the type of products to grow, how much to grow, and when to grow).

The Team further assessed potential providers and the feasibility of their providing these market-based solutions in a commercially viable and sustainable manner. Based on focus group discussions with farmers and hotels/restaurants and input from agriculture-related authorities, the Team initially identified two program intervention activities to support the development of these market-based solutions. The proposed intervention activities are:

• Support the conducting of a survey regarding demand for vegetables and herbs with hotels in Paro.
• Support pilot hotels insourcing directly from vegetable farmers.
  

Accommodations:

Just over 1,000 people are employed in the tourism industry in Paro, with the majority being employed in the accommodations sector. As tourist numbers have been increasing over the past years, opportunities for hotels to increase employment have appeared. However, when tourist numbers are low, fewer people are employed (due to the lower income of hotels). This means that those employed often work longer hours and are responsible for performing multiple tasks at the hotels.

Many hotel owners were quick to invest in hotel development, especially given the relatively large number of tourists arriving during the Paro festival. In the non-festival season or regular season, however, hotel occupancy rates are quite low. Hotel owners and managers lack the know-how to effectively package and market their accommodation to attract more tourists and for longer periods of stay. Furthermore, more attractions are needed to attract tourists during the regular season, not just in hotels, but in the greater Paro area.

Based on these challenges in the accommodations sector in Paro, the Team identified and prioritized focus on the following market-based solutions:

• Training in marketing strategies and use of market information for existing and potential hotel owners/managers.
• Provision of new products in the greater Paro area during the regular season as per the tourists’ demand.

To assess the feasibility of these market-based solutions, the Team held additional interviews and a focus group discussion with potential providers. Based on the challenges the providers face in providing these solutions on their own, the Team sought the providers’ opinions on what type of capacity-building support would be needed. From these suggestions, the Team selected a few key interventions to be implemented over the next 1-1.5 years. These interventions are:

• Work with private-sector provider(s) of marketing training to conduct a training needs assessment with hotel owner/managers and then prepare an effective training program
• With the Providers of New Tourism Products in Paro (tour operators),
  • Support the Association of Bhutanese Tour Operators (ABTO) to do a market survey of existing/potential products and services;
  • Support ABTO in reviewing current product development proposals; &
  • Support tour operators to develop new, private-sector products (potentially through the development of a small cost-share grants program with ABTO, capacity building and/or technical support).

Although additional discussions are to be held with SNV’s clients and other appropriate authorities, the final report of the assessment outlines a tentative work plan for the identified activities to be implemented over the course of the next 1.5 years. The report also provides information on other areas for potential intervention by SNV, TCB, and other SNV clients.

For more information or a copy of the report, please contact: Mrs. Nanda Ritsma, Adviser and Sector Leader, Pro-Poor Sustainable Tourism, SNV Bhutan.