Analysis of Regional Tourists in Bhutan Before Covid-19
Analysis of Regional Tourists in Bhutan Before Covid-19
Analysis of Regional Tourists in Bhutan Before Covid-19
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Abstract
Bhutan has a unique policy of “high value, low impact”, towards tourism. The tourists
visiting the country are divided into two forms, first are the ones who have been covered
under the above-mentioned policy, whereas the second are the regional tourists, who are the
tourists mainly from the three SAARC nations viz, India, Maldives and Bangladesh. As per
the diplomatic agreement the visitors from these countries are exempted from the tourism
policy and are considered to be of low value to the Bhutanese economy from the revenue and
employment point of view. However, the regional tourists have been sharing a significant
share of more than 50% in the overall tourism in the kingdom before covid 19. With the
global pandemic, the rationale of having regional tourists and creating appropriate policies
to deal with them has been a point of deliberations now. The point of consideration has been
about the way regional tourists can affect the hotel industry in Bhutan as it contributes to
the increase in the revenue for the country. As a result, our country can be able to generate
more revenue from regional tourists by encouraging a greater number of hotels as tourism is
the second highest revenue-generating factor in Bhutan. This study attempts to analyse the
impact of regional tourist on the hotel industry in Bhutan and explores the mediating role of
the government policies. For the purpose of the study, a quantitative analysis has been
carried out on the hotels of three most visited cities in Bhutan i.e., Thimphu, Paro and
Phuentsholing using the snowball method. From these analyses we were able to come up
with the conclusion of how the increasing number of regional tourists are having the impact
on the hotel industry based on the factors like government policies, e-technology and
capacity of the hotels.
1. Introduction
1.1. Tourism and Bhutan
Tourism is defined by World Tourism Organization (WTO) as "people, traveling to and
staying in places outside their usual environment for not more than one consecutive year for
leisure, business and other purposes". The tourism industry is reported to contribute USD
7.61 Trillion to the global economy as of 2016, during the same time hotels were estimated to
contribute USD 550 billion. According to Tourism Council in Bhutan (TCB), Bhutan opened
its door for the outside world in the year 1971 through the formulation of Tourism
Regulation. However, it adds that tourism was introduced in the year 1974 with the arrival
of 287 tariff paying tourists in Bhutan. The number of tourists increased from 287 to close to
41,000 tariff paying tourist in the year 2010 (International Trade Forum, 2011). Many
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scholars who have interest in the Bhutanese tourism sector have applauded the successful
tourism policy of “high value, low volume” policy initially implemented in Bhutan that later
was renamed as “high value, low impact” (Lhendup and Panda,2020; Ghosh and
Chakraborty,2020). The Review Report on Tourism Policy and Strategies (2016) states that
the policy has been very successful in developing Bhutan as a niche destination for
travelers worldwide especially for cultural and ecological tourism. As tourism plays a vital
role in generating employment opportunities and revenue and also encouraging increasing
number of entrepreneurs to invest in the tourism sector (Trusova et al., 2020). Considering
the geography of the kingdom, Bhutanese tourism sector is dependent on the season i.e.,
March-April and October-November are considered as peak months for the tourism as the
weather is ideal for mountain hiking and trekking along with regional festivals being
organized in different parts of the kingdom. January-February and June-July are
considered as lean season as due to the rain it becomes hard for the tourist to trek and the
other activities also get hampered. According to Review Report on Tourism Policy and
Strategies (2016), All tours are to be led by licensed Bhutanese guides and there are about
2500 licensed guides in the country.
In the country, we see opportunities for the hoteliers who do not operate three-to-five-star
hotels in Thimphu, Paro and Phuentsholing which mainly serves as tourist destination for
regional tourist. According to the Tourism Monitor Report 2015, 73% of non-tariff tourists
come from Phuentsholing, 26.68% from Paro Airport, 0.05% from Gelephu and 0.26% from
SamdrupJongkhar. The large number of non-tariff tourists have benefitted small and
medium budgeted hotels including some of the three-star hotels.
During the years 2011-2016, total number of regional tourists visiting in the country was
146,797 of which 114,301 were Indians and 7,753 from Bangladesh and 69% of regional
tourist arrived over land and rest from air (BTM, 2016). The maximum number of regional
tourists visited the country in May of 2016 at a record of 23,694, according to BTM 2016. It
also states that the highest number of visitors from the region were from India with 98.1%,
1.5% from Bangladesh and 0.4% from Maldives. In addition, in the year 2016, mostly male
regional tourists comprise of 64.8% and female of 35.2% where majority of regional tourists
were young which falls within the age range of 22-45. 52% of regional tourists stayed in
non-star hotel, 38% stayed in star-rated hotels and around 7% of them stayed in lodges
(BTM, 2016). The regional tourists are not covered under the 'high value, low impact', policy
of the government and thus, do not have to pay the usual USD 200 to USD 265 a day, they
visit Bhutan without the need to have a guide and driver as many of them drive their own
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vehicle without any restriction in any part of the country, some the regional tourists bring
their own groceries and picnic around the country which leads to littering the places. It is
leading to a greater number of regional tourists visiting Bhutan which is a big issue for
Bhutan as it has negative impacts on the country. So, the tour operator also suggested
implementing strong regulation and policy concerning regional tourists in order to
maintain 'High Value, Low Impact' (Wangmo, 2017).
Hotel Industry is crucial for Bhutan as it is an integral part of the tourism sector generating
foreign exchange and employment opportunities (Travels, 2018). As a greater number of
tourists are interested to visit Bhutan, Bhutan Tourism Corporation encouraged a greater
number of hotels for the tourists as it can be able to generate more income and lead to
growth and development of our country (International Trade Forum, 2011). It is essential to
ensure a good travel experience to the tourists for which it is important to have hotels with
well- set quality standards designed as per health-hygiene, operation and safety guidelines
of the country (Solution, 2018). So, well set-up hotels can help in generating more income
and will be able to generate more employment opportunities. Bhutan’s tourism policy of
'High Value, Low Impact” limits the number of tourists visiting the country and the
increasing number of regional tourists also limits the number of dollar-paying tourists who
uses the services of three-star to five-star hotels.
Based on these observations the researchers studied this field to find out the impact of
increasing number of non-dollars paying (regional) tourists on hotel industries which leads
us to do findings of the gap between the demand and the supply of non-dollar paying
(regional) tourists in the hotel industries during the peak season and the lean season,
potentiality of non-dollar paying (regional) tourists in Bhutan and challenges and prospects
among hotel industries. The number of tourists who have visited the kingdom in 2016 was
2,09,000 (Dorji, n.d) out of which fifty percent of the tourists were regional tourists. As the
tourism industry has become one of the major contributors to the economy of Bhutan with
the increasing number of tourists visit to the country every year, the researchers have found
regional tourists receiving less importance in the body of literature, further, very limited
studies have been conducted in the context of Bhutan in the arena of tourism. As tourism
sector is expected to regain the momentum after covid era, a bigger dependency on the
regional tourist is expected in the times to come and their impact on the Bhutanese tourism
sector requires attention and deliberations.
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temperance society on a train. He fed them and also took care of entertainment and
accommodation showed them that having a good time does not require alcohol (Travel on
Spot, 2016). He organized more of these tours and eventually started his own travel business.
Thomas Cook's success in the business is considered to mark the birth of modern tourism.
Travelers are attracted to the natural beauty or the environment like site scenes, high
mountains, deep sea, friendly people, different social group, unique culture and important
historical and religious resources which comes as a free gift to the country unlike other
development sectors such as manufacturing or mining industries and others. Due to such
nature of tourism, its investment is believed to be less capital intensive for both maintenance
and development purpose. Hence, World Tourism Organization and International Hotel and
Restaurant Association (WTO & IHRA, 1999) acknowledged that tourism emphasis its role of
importance for economic and sustainable development mostly in less developed countries
(Theobald, 2005; Richter, 2019; Strickland, 2019).
In Bhutan, the Government agency started its first tourism industry in Bhutan in 1974
named Bhutan Tourism Corporation and turned itself private in 1991 and now the revenue
generation for tourism industry has witnessed a significant growth to USD 73 million in 2014
from USD 2 million (Statistical Yearbook of Bhutan [SYB], 2016; ). The tourism industry has
enjoyed the continuous growth ever since due to its pristine state of culture and natural
heritage attracting all walks of life (SYB, 2016; Sharma, 2019; Strickland, 2019). The tourism
council of Bhutan has kept the minimum daily package cost as USD 200 for off seasons and
USD 250 for the peak seasons, that covers the cost of a 3-star hotel accommodation, all
meals, a licensed tour guide. This package also includes the in-country transportation,
camping equipment's and internal taxes. From this sum, the contribution of USD 65 is taken
by the government to be spent on facilities like free education, free healthcare, poverty
alleviation and developing infrastructure. The regional tourists on the other hand are
exempted from such requirements. The regional tourists need not pay the daily tariff and are
under no compulsion of selecting the hotel. Thus, most prefer staying in local hotels which
are cheaper than 3-to-5-star hotels. According to the Tourism Monitor Report 2015, 73% of
nontariff tourists come from Phuentsholing (the land border with India), 26.7% from Paro
Airport, 0.1% from Gelephu and 0.3% from SamdrupJ ongkhar. The large number of non-
tariff tourists has benefitted small and medium budgeted hotels including some of the three-
star hotels.
During the year 2011-2016, total number of regional tourists visiting in the country was
146,797 of which 114,301 were from India and 7,753 were from Bangladesh and 69% of
regional tourist arrived over land and rest from air (BTM, 2016). The maximum number of
regional tourists visited the country in May of 2016 at a record of 23,694, according to BTM
2016. It also states that the highest number of visitors from the region was from India with
98.1%, 1.5% from Bangladesh and 0.4% from Maldives. In the year 2016 mostly, male
regional tourists comprise of 64.8% and female of 35.2%. Majority of regional tourists were
young which falls within the age range of 22-45. 52% of regional tourists stayed in non-star
hotel, 38% stayed in star-rated hotels and around 7% of them stayed in lodges (BTM, 2016).
It can be clearly drawn that every year, there is increasing flow of tourist in the kingdom
especially regional tourists. Their flow has both negative as well as positive impact on the
country (Lhendup & Panda, 2021; Sharma, 2019) . Due to the non-tariff policy, the regional
tourist gets more freedom with regards to lodging, accommodation, transportation and food.
Bhutan has hundreds of hotels located all across the country which ranged from small,
simple and local hotels (budgeted) to luxurious resorts (three-, four- and five-star hotels) for
affluent travelers seeking the ultimate gateway but in terms of tourists all the tour operators
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are required to provide their guests with minimum of three-star accommodation so that
they can assure the tourists a comfort (TCB, 2017).
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2.1.1. E-Technology
Electronic Technology plays a vital role now with the emerging modernization and
development. For the kingdom like Bhutan, it still be a developing country, it has many
ladders to climb before coming to equal footings in terms of technology with the rest of the
world. According to Anderson and Henriksen, 2006, it states that one of the primary
objectives of the E-Bhutan project is to focus on e-governance initiatives for public and
private agencies involved in the tourism sector. However, due to the rapid development
and exposure to the world, there are electronic/online reservation of rooms and also
electronic payments available in the country (Andersen and Henriksen, 2016). This brings
convenience to the tourists and comfort to their minds. Therefore, this factor plays a vital
role in influencing regional tourism.
Table 2. E-Technology
Variable
Factor 2: E-Technology Major Literatures and Studies
Coding
Rooms are booked via e-reservation Chaisawat, K. N. (2011); Travel Trade Journal (2017);
by the regional tourists visiting our Andersen and Henriksen (2016); Lhendup & Panda
ET1 hotel. (2021).
Chaisawat, K. N. (2011); Travel Trade Journal (2017);
Regional tourists usually go for on Andersen and Henriksen (2016); Lhendup & Panda
ET2 arrival bookings. (2021).
Chaisawat, K. N. (2011; Travel Trade Journal (2017);
Andersen and Henriksen (2016); Lhendup & Panda
ET3 E-Booking is beneficial to our hotel. (2021).
Chaisawat, K. N. (2011); Travel Trade Journal (2017);
Payment are done via electronic Andersen and Henriksen (2016); Lhendup & Panda
ET4 methods. (2021).
The location of rooms are selected Chaisawat, K. N. (2011); Travel Trade Journal (2017);
by the regional tourists before their Andersen and Henriksen (2016); Lhendup & Panda
ET5 arrival. (2021).
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GP2 The government pol i cies a re Revi ew Report on Touri s m Pol i cy a nd Stra tegi es (2016);
s upporti ve a nd encoura gi ng. Touri s m Council of Bhuta n (n.d.); Druk As i a (n.d.); Dorji , T.
(n.d.); Bus i nes s Bhuta n (2016), Ts heri ng (2015) ; Lhendup a nd
Pa nda (2020); Ghos h a nd Cha kra borty (2020)
GP3 The s l oga n ‘Hi gh Va l ue, Low Sta ti s ti cal Yea rbook of Bhuta n (2016); Revi ew Report on
Impa ct’ ha s a ffected us Touri s m Pol i cy a nd Stra tegi es (2016); Touri s m Council of
a dvers el y. Bhuta n (n.d.); Druk As i a (n.d.); Dorji , T. (n.d.); Bus i nes s Bhuta n
(2016), Ts heri ng (2015) ; Lhendup a nd Pa nda (2020); Ghos h a nd
Cha kra borty (2020); Stri ckl a nd (2019). (Stri ckl a nd, 2019)
GP4 Immi gra ti on rul es a re fa vora bl e Sta ti s ti cal Yea rbook of Bhuta n (2016); Revi ew Report on
a nd conducive. Touri s m Pol i cy a nd Stra tegi es (2016); Druk As i a (n.d.); Dorji , T.
(n.d.); Bus i nes s Bhuta n (2016), Ts heri ng (2015) ; Lhendup a nd
Pa nda (2020); Ghos h a nd Cha kra borty (2020); Stri ckl a nd (2019).
GP5 Government fa cil i ti es a re Revi ew Report on Touri s m Pol i cy a nd Stra tegi es (2016);
a dequa te. Touri s m Council of Bhuta n (n.d.); Druk As i a (n.d.); Dorji , T.
(n.d.); Bus i nes s Bhuta n (2016), Ts heri ng (2015) ; Lhendup a nd
Pa nda (2020); Ghos h a nd Cha kra borty (2020); Stri ckl a nd (2019).
IC2 The standard of the rooms of the Hanqin Qui Zhang, Ellen Wu, (n.d.); International Trade Forum(2011); Market Size
hotel has increased. of the Global Hotel Industry (2017).
IC3 The number of staff inthe hotel has Hanqin Qui Zhang, Ellen Wu, (n.d.); International Trade Forum(2011); Market Size
increased. of the Global Hotel Industry (2017).
IC4 Our acceptance in the market has Hanqin Qui Zhang, Ellen Wu, (n.d.); International Trade Forum(2011); Market Size
increased in recent years. of the Global Hotel Industry (2017).
IC5 Extra beds has been added in the Hanqin Qui Zhang, Ellen Wu, (n.d.); International Trade Forum(2011); Market Size
rooms in recent years. of the Global Hotel Industry (2017).
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The above model tests the direct relation that regional tourists and their preferences (RT)
has on capacity of hotels and adoption of technology. For this purpose, capacity of hotels
(IC) and e-technology (ET) have been combined as one factor (ETIC). This model further
explores the mediating role of the government policies (GP). This model is expected to test
the following main hypothesis;
H1: Regional tourists have direct impact on capacity of hotels and adoption of technology.
H2: Government policies have a significant relation to regional tourists and their
preferences.
H3: Government policies have a significant relation to capacity of hotels and adoption of
technology.
H4: Government policies have a significant mediating role between regional tourists and
their preferences and capacity of hotels and adoption of technology
1. Research Methodology
The hotels at Thimphu, Paro, and Phuentsholing were selected for study because it has a
large representation of hotels in Bhutan. Target population involved in the study consisted
of all the Managers of the hotel. The hotel's Information was obtained from www.hotel.bt
indicated that there were two hundred fifty-four hotels registered as of 2018.The major
hotels were located at Thimphu as 68, Paro 51, and Phuentsholing 27. Therefore, the
researchers have conducted survey in Dzongkhag based on the majority of hotels located.
Since the researchers were new to the hotel industry with limited connections, snowball
sampling technique was utilized where the hotel managers were asked to connect the other
hotel's managers/owner to register the response. The research team in Bhutan visited each
of the hotels in person to take their feedback and responses on the questionnaire. The
profile of the hotels is given as under table 7.
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The number of hotels covered by the group as per the ratings of the hotels starts from budget
hotel to 5-star hotel. The sample of the data collected by the group includes 52.6 percent of
budgeted hotels, 44.3 percent of 3-star hotels, 2.1 percent of 4-star hotels and 1 percent of
5-star hotels. In our sample 45.4 percent of hotels were located in Thimphu, 35.1 percent
were located in Paro and 19.6 percent were located in Phuentsholing in terms of percentage.
We collected the data from hotels which provided lodging facilities.
It can be seen that 84.5% hoteliers deal with regional tourists and 15.5% hoteliers does not
deal with regional tourists, whereas 50.5% hoteliers deal with non-regional tourists and
49.5% hoteliers does not deal with non-regional tourists.
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In terms of facilities available in the hotels., 63.9% hotels have its own parking space while
36.1% does not have parking space for the regional tourists visiting the hotels.81.4% of
hoteliers provide Wi-Fi facilities and 18.6% of hoteliers do not provide Wi-Fi facilities to the
visitors. 70.1% of hoteliers have laundry service and 29.9% of hoteliers do not have laundry
services.90.7% of the hotels have its own bar whereas 9.3% does not have their own bar for
the visitors. All the sampled hotels had their own restaurants catering to the food
requirement of the guests. 13.4% hotels have their own shopping center and souvenir while
86.6% hotels do not have. We can conclude from the above result generated that 28.9
percent of the hotels provide spa facility and 71.1 percent did not have spa facility. We can
conclude from the above result generated that 38.1 percent of the hotels had conference hall
and 61.9 percent were not having conference hall. To check the reliability of the data
utilized, Cronbach alpha values have been utilized as the measurement variable as given
under table 8.
2. E-Technology 5 .621
7. Overall 26 .712
Cronbach (1951) suggested that alpha value more than .5 shows the acceptable level and
it's considered to be reliable. The alpha value above .7 is considered to be very good i.e.,
highly reliable. This means that the data collected has a decent level of internal consistency
and thus is referred as reliable. As seen from the Table 4.13. Cronbach's Alpha has achieved
the acceptable figures i.e., >.5 with an overall alpha value of >.7. This means the data is
reliable and can be used for the present study on a liberal side.
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As it can be seen from the Table 4.1.9, at an overall level the mean score suggests that the
mean values are towards the agreement scale i.e., 3 to 4. This suggests that majority of the
respondents agreed to the statements pertaining to RT.
Table 10. Descriptive Statistics of E-Technology
As it can be seen from the Table 4.1.10, at an overall level the mean score suggests that the
mean values are towards the agreement scale i.e. 3 to 4 except ET4 (2.7732). Thus, the
Orientation has been achieved on the agreement side for this variable.
Table 11. Descriptive Statistics of Increasing Capacity of Hotels
As it can be seen from the Table 4.1.11, at an overall level the mean score suggests that the
mean values are towards the agreement scale i.e. 3 to 4 except IC1 (2.6082) and IC5
(2.9485). Thus, the Orientation has been achieved on the agreement side for this variable.
As it can be seen from the Table 4.1.12, at an overall level the mean score suggests that the
mean values are towards the agreement scale i.e., 3 to 4 except GP3 (2.6804). Thus, the
Orientation has been achieved on the agreement side for this variable.
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RT ET IC GP
RT 1 .561** .438** .270**
ET 1 .470** .196
IC 1 .308**
GP 1
**. Correlation is significant at the 0.01 level (2-tailed).
N=97
Significant means the probability of not happening an event where the probability of not
happening is 0.01, which means 99% of the time it, will happen. RT has a positive,
significant and moderate correlation with IC. Thus, it says that if capacity increases of
hotels then RT will also increase. GP is having a weak but significant impact which means
GP too has a role
GP ET& IC RT
GP 1 .297** .270**
ET & IC 1 .579**
RT 1
The correlation analysis is performed to evaluate the statistical relationship between the
variables. The actual correlation coefficient tells the strength of a linear relation between
variables. The correlation value between GP and ETIC is 0.297 and GP and RT is 0.270.
Therefore, there is almost moderate positive correlation between both GP and ETIC and GP
and RT.
The significance level (p) is 0.01. In the above table, the significance value between GP with
ETIC and RT is 0.003 and 0.007 respectively. The significance values are less than
significance level (p). So, there is significant relationship between GP with ETIC and RT.
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The above analysis proves that there is a direct relationship between regional tourists and
their preferences (RT) and increasing capacity and adoption of e-technology (ETIC). Further
there is no mediator role played by government policies (GP). This leads to acceptance of H1
and rejection of H4. The snapshot of the same is given below.
H4: Government policies have a significant mediating role between regional tourists Rejected
and their preferences and capacity of hotels and adoption of technology.
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5. Conclusions
Bhutan started to open its door to the outside world with the formulation of Tourism
Regulation in the year 1971. However, tourism was introduced in the year 1974 with the
arrival of 287 tariff paying tourists in Bhutan. A regional tourist is a tourist visiting a
country other than that in which he/she has a normal residence but within a defined
geographical region. Visitors from India, Bangladesh and the Maldives are referred to as
regional tourists in Bhutan. Regional tourists visiting Bhutan need not have to pay the
USD 200 to 250 that is levied on non- regional tourists.
The research that the group has done is on the impact of increasing number of regional
tourists on the hotel industry in Bhutan. Through the research the group has come to
know that the independent variables like tourists season, capacity of hotel and the
adoption of the e-technology, government policies, customers feedback have some
relationship with the dependent variable i.e., regional tourists.
After collecting the sample of 52.6 percent of budgeted hotels, 44.3 percent of 3 star hotels,
2.1 percent of 4-star hotels and 1 percent of 5 star hotels from Thimphu, Paro and
Phuentsholing. The group came to know that variables like tourists season do not have any
impact on the regional tourists. So no matter what the tourists season maybe there will not
be any difference in the number of regional tourists visiting Bhutan. Whereas variables like
e-technology have a huge impact on the tourism and hotel industry in Bhutan.
Question 1: Does tourist seasons play any role in the visit of regional tourists?
The correlation analysis suggests that there is no significant relation between tourists
seasons and regional tourists. Regional tourists relation with tourists seasons is negative
and insignificant plus it's a weak correlation which means tourists seasons has no relation
with regional tourists.
This in other words suggests that regional tourists visit is not affected by seasons and can
be seen as an all year-round business opportunity for the hotels. Thus, special attention is
required to preserve the visits of regional tourists by way of policies and practices.
Question 2: What is the impact of regional tourists on the capacity and the adoption of e-
technology of hotels?
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Regional tourists have an impact on the capacity and the adoption of e-technology of
hotels. This has been proven through regression analysis where the p value was found less
than .05, this helped us to test the hypothesis H1. The same model was also tested through
SEM analysis which found a direct relation between regional tourists and capacity of hotels
and adoption of e-technology.
This helps us to conclude that regional tourists have impacted the hotels. That is the hotels
had to increase their capacity and have also influenced them to adopt e-technology.
Question 3: What is the relationship between government policies and regional tourists
visiting Bhutan?
The correlation analysis suggest that role of government policies has a significant relation
on regional tourists visiting Bhutan though it is not very strong.
Thus, in other words the inflow of regional tourists is affected by the government policies
and government should bring in policies, which are easy, and fast to process in order to
improve the flow of tourists.
Question 4: What is the impact of government policies on capacity of hotels and adoption of e-
technology?
On an overall view, through the use of regression analysis, government policies have
significant impact on the capacity of hotels and adoption of e-technology. However, on an
individual basis, increase in capacity is impacted by the government policies but not the e-
technology since it is not significant. This is because government has no policies regarding
e-technology in the kingdom. The researchers are of the opinion that a policy pertaining to
the adoption of e-technology among hotels may influence the hotels to adopt the same and
use it more effectively.
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6. Recommendations
The following recommendations are made to the various stakeholders directly or indirectly
impacted by this study:
6.4. Researchers
We would like to recommend the future researchers that in order to collect the data it would
be better if they could go during the lean seasons because it would be convenient for them to
collect the data as the hoteliers would not be busy during that time unlike the peak seasons.
References:
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4. Babbie, E. R. (2010). Research Guides. Retrieved 11,01,2017, from Libraries: libguides.usc.edu.
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