Would like an extension of the repayment term of the loan of service
Yangchen C Rinzin
Representing hoteliers, the Association of Hotels and Restaurants of Bhutan (HRAB) wants the service sector to be included in the sectors that would benefit from the extension of the loan repayment term.
Believing that the hospitality industry would take time to recover from the impact of the pandemic even if tourism opens up, HRAB Chairman Sonam Wangchuk said there was a need for economic relief programs to the hospitality industry.
Recently, the Royal Monetary Authority increased loan repayment terms from 20 to 30 years, excluding the maximum gestation period of three years. The benefit of the additional loan repayment term of 10 years, however, only applies to business loans and home loans.
“Hoteliers whose businesses have been severely affected by the pandemic must be included in any economic relief program, as it is well known that the tourism sector has been affected,” he said. “We still don’t know when tourism will restart, and when it does, it won’t return to normal as quickly.”
The president also said that after the fiscal and monetary interventions, namely the postponement of loan payment and kidu, is coming to an end, hoteliers will still not be able to repay loans at current interest rates.
He said the association expects a 50 percent cut in interest rates.
Currently, those who have benefited from service loans pay an interest rate ranging from a variable rate of 7.9 to 12%, depending on the interest options.
While recognizing the kidu received during the pandemic, including allowing hotels to function as quarantine centers, HRAB members said it was time to prepare a mechanism to address the issue of loan repayment after Covid-19, as hotels are not will not see business pick up immediately, even if tourism returns to normal.
“Interest on loans was originally calculated on a market basis, and when the hospitality industry market is affected, there is no way for hoteliers to repay loans at the same interest,” did he declare.
HRAB Executive Director Sangeeta Rana said there is a misconception that hoteliers gain a lot from quarantine facilities and conference venues, and that there is no need for back-up plans economic. “Only about 100 of the 650 hotels are operating as quarantine facilities today, and most of them are in Thimphu, Paro and Punakha.”
The executive director said the tourism and hospitality industry cannot be excluded from the relief talks. “There are no discussions on how to help the sector after the pandemic. “
HRAB currently has around 230 members who employ nearly 18,000 people.