Bhutan has a thriving tourism industry with a significant increase in arrivals. The tourism sector is one of the largest employers and second highest revenue contributor in the country. However, the tourism activities and income are largely concentrated in the three most popular destinations in the west.

Thimphu, Paro and Punakha held more than 75% of the total visits, while the eastern and southern provinces altogether received less than 5% of the tourists in 2018. While the touristic hotspots become overcrowded and reach their carrying capacity, rural districts hardly benefit from the tourism income.

The tourism industry heavily relies on imported resources to meet the overwhelming guest demands, whereas poverty in rural areas remains almost 10 times higher compared to urban areas. Young workers leave their home to find jobs in Thimphu, Paro and Phuentsholing, thus labour shortage in the hinterland occurs and many suffer from social dislocation and lack of belongingness.

Livelihood of people in rural areas is mostly dependent on subsistence agriculture, and irresponsible harvesting of timber and non-wood forest products (NWFP) partially leads to overexploitation of natural resources. These informal groups/producers need to be brought into the tourism value chain and the MSMEs need support to enhance the production capacity and service quality.

The substantial potential for tourism in the east and the south regions – exceptional landscapes, unique natural assets, rich cultural heritage and a diversity of ethnic minorities – is yet to be explored.