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Background: Influenza burden estimates help provide evidence to support influenza prevention and control programs. In this study, we estimated influenza‐associated respiratory hospitalization rates in Bhutan, a country considering influenza vaccine introduction. Methods: Using real‐time reverse transcription‐polymerase chain reaction laboratory results from severe acute respiratory infection (SARI) surveillance, we estimated the proportion of respiratory hospitalizations attributable to influenza each month among patients aged <5, 5‐49, and ≥50 years in six Bhutanese districts for 2015 and 2016. We divided the sum of the monthly influenza‐attributed hospitalizations by the total of the six district populations to generate age‐specific rates for each year. Results: In 2015, 10% of SARI patients tested positive for influenza (64/659) and 18% tested positive (129/736) in 2016. The incidence of influenza‐associated hospitalizations among all age groups was 50/100 000 persons (95% confidence interval [CI]: 45‐55) in 2015 and 118/100 000 persons (95% CI: 110‐127) in 2016. The highest rates were among children <5 years: 182/100 000 (95% CI: 153‐210) in 2015 and 532/100 000 (95% CI: 473‐591) in 2016. The second highest influenza‐associated hospitalization rates were among adults ≥50 years: 110/100 000 (95% CI: 91‐130) in 2015 and 193/100 000 (95% CI: 165‐221) in 2016. Conclusions: Influenza viruses were associated with a substantial burden of severe illness requiring hospitalization especially among children and older adults. These findings can be used to understand the potential impact of seasonal influenza vaccination in these age groups. [ABSTRACT FROM AUTHOR]