Before 2022, the tourism policy in Bhutan was based on the Minimum Daily Package Rate (MDPR) system, which required tourists to pay a minimum daily rate of US$200-250 per person per day, depending on the season. This fee included accommodation, meals, transportation, and the services of a licensed Bhutanese tour guide. The MDPR was intended to promote high-value, low-impact tourism and to ensure that tourism contributed to Bhutan’s sustainable development goals.

However, in 2020, the COVID-19 pandemic severely impacted the tourism industry in Bhutan and around the world. To support the industry, the government of Bhutan introduced a series of measures, including a reduction in the MDPR and the introduction of a Sustainable Development Fee (SDF) for regional and international tourists.

Bhutan introduced the Sustainable Development Fee (SDF) as part of its tourism policy in 2020 to promote sustainable tourism in the country. The SDF replaced the Minimum Daily Package Rate (MDRP), which had been in place for several decades. The decision to replace the MDRP with the SDF was based on the need to address issues such as regional disparity and sustainability.

The SDF is a fixed amount that every tourist must pay per day, and it  excludes the cost of accommodation, meals, transportation, and a licensed guide. This fee is set at US$200 per person per night for international tourists, and Nu. 1,500 per person per night for regional tourists from India, Bangladesh, and the Maldives.

The decision to remove the MDRP and replace it with the SDF was made to address issues of regional disparity and promote sustainable tourism in Bhutan. The MDRP had created an uneven distribution of tourism benefits, with some regions receiving more tourists than others. The introduction of the SDF was aimed at promoting more equitable distribution of tourism benefits across the country, as well as supporting conservation and community development initiatives.

Another reason for introducing the SDF was to ensure that Bhutan remains an exclusive and high-value destination for tourists. By setting a higher daily fee, the government hopes to attract a more discerning and sustainable type of tourist who is willing to pay a premium for an authentic and unique travel experience. This, in turn, is expected to benefit the local communities and the environment in the long run.