Tourism recovery continues but remains uneven

2026-03-02 - 08:35

Service sectors continue to perform strongly, but overall growth is expected to moderate to 5.82 percent, down from the earlier projection of 6.21 percent for 2025, according to the macroeconomic outlook from the Ministry of Finance (MoF). The downward revision is mainly due to the hotels and restaurants subsector, which is projected to perform 13.01 percentage points lower than the previous quarter’s estimates. This reflects ongoing challenges in Bhutan’s tourism ecosystem, which has not yet fully rebounded despite the complete reopening of the country’s borders. Many tourism establishments continue to operate with excess capacity compared to actual occupancy levels. Facilities remain underutilised outside the traditional tourism season, which has dampened revenue recovery and constrained broader service sector growth. A similar trend is expected in 2026, with overall service sector growth continuing to be affected by the performance of the hotels and restaurants subsector, as economic actors adjust to persistent structural constraints. Over the long term, service sector growth is expected to shift toward higher-value segments such as wellness, professional services, creative industries, ICT and digital activities. The pace and quality of tourism recovery will increasingly depend on targeted policy interventions aligned with Bhutan’s ‘High Value, Low Volume’ tourism strategy, according to the report. Tourism arrival data for 2025 show that Bhutan has recovered to 66.34 percent of pre-pandemic (2019) arrival levels. This represents a 33.82 percent increase from 2024, when tourist arrivals stood at 156,463. While the recovery remains gradual, it signals steady progress toward normalisation. However, the rebound has been uneven across visitor segments according to the report. Arrivals from Countries Other Than India (COTI) have already surpassed pre-pandemic levels, indicating stronger recovery among higher-spending and less price-sensitive tourists. In contrast, more price-sensitive segments have yet to return to pre-pandemic levels, highlighting the importance of differentiated targeting and pricing strategies.