Arya News - Luxury hotel operators in Bhutan say that soaring costs have diluted premium room revenues, even as employees call for better wages and review of salary structures.
THIMPHU -Luxury hotel operators in the country maintain that premium room rates do not translate into equally high profits, arguing that steep operating costs, seasonal demand and the expense of maintaining international standards significantly erode revenues.
The industry’s response follows a Kuensel investigation published on July 18, “Bhutan luxury hotels cash in on premium rates while staff wages lag behind”, which highlighted the disparity between high room tariffs and the wages paid to many hotel employees.
While operators insist remuneration should be viewed as a comprehensive package that extends beyond basic pay, employees continue to call for higher fixed salaries, greater transparency and government intervention to improve wage standards across the hospitality sector.
The Luxury Hospitality Operators Group and the Hotel and Restaurant Association of Bhutan (HRAB) said entry-level salaries are aligned with the government’s minimum wage requirements and are intended for employees with limited skills or experience who receive extensive in-house training.
According to the industry, total employee remuneration includes benefits such as service charges, gratuities, housing allowances, pension contributions, training opportunities, and welfare benefits, in addition to basic salaries.
Operators cautioned higher mandatory base salaries for 5-star hotels could lead to unintended consequences, including a shift towards hiring experienced staff instead of training new entrants, reduced staffing levels, and fewer employment opportunities for unskilled Bhutanese workers.
A hotel’s Country General Manager said the hotels have implemented the National Career and Occupational Framework 2025 for the Tourism and Hospitality Sector launched by the Department of Tourism.
“Our annual salary increases have far exceeded the rate of inflation here in Bhutan, and we are very proud of the progress we have made in this regard,” he said. “Currently, there are several Bhutanese nationals who are enjoying employment and careers.”
The employees, however, call for government intervention to ensure decent wages across the hospitality sector and a review of salary structures to reduce dependence on seasonal service charges.
For example, a luxury hotel may charge around USD 2,000 per room per night, but entry-level employees often receive basic salaries of about Nu 14,000, with service charges bringing total monthly earnings to around Nu 24,000.
“In Bhutan, service charges are received only during the peak season, while there are more than four months in the low season without such payments. A fixed salary would provide greater job security,” said one employee.
Employees also pointed out pay disparities between expatriate and Bhutanese staff in similar positions, particularly at supervisory and management levels, and called for a review of employment practices, including the appointment of expatriates in human resource positions.
Government and corporate sector vacancies generally disclose salary structures and employment benefits as part of the recruitment process. However, many private sector employers, including the hotel industry, do not provide such information in vacancy announcements, which undermines transparency.
According to the member hotels, the practice follows internationally established norms and governance practices in their recruitment processes, and remuneration packages are maintained as confidential.
“Basic salaries are often disclosed in the early stages of the recruitment process, but the holistic remuneration package, which includes the full range of employee benefits, is disclosed to successful candidates when formal offers of employment are extended,” said a hotel member.
The industry declined to disclose detailed workforce data, occupancy rates, salary structures and revisions, and audited financial statements, including tax payments and profitability figures, citing confidentiality, corporate governance practices, and commercial sensitivity.
Internationally, disclosure of profits and audited financial statements depends on ownership structure, with publicly listed companies required to disclose financial records while private hotels are not obligated to make such information public.
Operational cost reality
Bhutan has 20 five-star hotels, with most properties concentrated in Thimphu, Paro, and Punakha. The rapid expansion of hotel capacity has increased room availability across the country.
Operators said the room rate of USD 4,000 per night applies only to a small number of large luxury villas with three or more bedrooms. Standard room rates generally range from about USD 850 during the low season to USD 2,700 in the peak season.
They said these prices are typically all-inclusive, covering accommodation, meals, beverages, private transport, guides, drivers and curated guest experiences. “Each of these inclusions carries substantial fixed costs that must first be deducted before determining the property’s actual room revenue and profitability,” one member said.
“Consequently, the net room revenue retained by the hotel is considerably lower than the headline accommodation rate, and room prices alone do not reflect actual profitability,” said a member.
The operators explained that Bhutan should be viewed within its own unique operating environment, with a peak tourism season of four to five months and luxury hotels employing three to five employees per room. Additional working hours are compensated through time off during the low season.
While operating at significantly lower occupancies throughout much of the remainder of the year, operators said hospitality businesses continue to maintain their workforce, paying full salaries and benefits and investing in staff training and development throughout the year.
They argued that luxury hospitality in Bhutan operates in a challenging environment, with high import costs, duties and taxes, transport and logistics expenses, infrastructure constraints, property maintenance costs, and the operation of remote lodges contributing significantly to the overall cost base.
Maintaining international luxury standards also requires continued investment in guest amenities, imported supplies, equipment, and property upgrades to deliver the expected experience while keeping Bhutan competitive as a premium destination, according to the operators.
They said hotels make considerable investments in promoting Bhutan internationally, with most operators allocating 8–10 percent of annual revenue to global sales, marketing, public relations, travel trade events, and destination promotion initiatives.
A member said distribution costs, including commissions of up to 25 percent per booking paid to destination management companies and international travel advisors, further reduce the revenue retained by hotel operators.
The member said the luxury hospitality industry has played an important role in positioning Bhutan as a high-value, low-volume tourism destination. “These sales, marketing and distribution costs are significant, further dilute profitability, and should be considered within the overall business model and assumptions.”
Luxury hotels said they invest in the training and development of Bhutanese employees, with more than 99 percent of their workforce comprising Bhutanese nationals and expatriates accounting for less than one percent.
They added that local and international operators provide leadership development and skills transfer opportunities, enabling Bhutanese hospitality professionals to build careers within Bhutan and across their international properties while contributing to the Bhutan’s economy, reputation, and workforce development.
“Our sector contributes to a broader economic ecosystem and supports a wide network of Bhutanese businesses, including tour operators, guides, drivers, farmers, artisans, transport providers, contractors, and local suppliers,” said a member. “Our industry also generates foreign exchange, tax revenue, and international visibility that benefits the country.”
Industry observers argue that operational costs and other expenses should not be cited as justification for low employee salaries, and that wages should be tied to the local cost of living and rising inflation to ensure a good quality of life and a minimum standard of living.
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Bhutan’s luxury hotels cash in on premium rates while staff wages lag behind