The Tourism Growth Conundrum!

  20 min 23 sec to read
The Tourism Growth Conundrum!

Nepal’s tourism planners seem absorbed in setting targets that are wishful thinking rather than based on market and ground realities.


Immense potential, dismal performance
To compare Nepal and Switzerland, in tourism, may appear outrageous or even silly considering Switzerland’s outstanding reputation and achievements in the international tourism market. But such comparision-contrast can also modestly illustrate Nepal’s potential in tourism. 

With three and a half times the size of Switzerland, Nepal is tremendously diverse, intrinsically complex and delightfully beautiful in geography. Nepal boasts 16 mountains above 8,000 meters, eight of them are among the world’s ten tallest. There are large numbers of peaks starting from 5,000m too. By contrast, Monte Rosa, Switzerland’s tallest mountain and second highest in the Alps range, is 4,634m, i.e. almost half Mt. Everest and even less than Thorang La Pass. This altitude is where Switzerland draws its major tourism advantage from. Its low altitude snowline is its advantage. Snowline at the Alps, a mountain range stretching across Central Europe including Switzerland, is somewhere around 2,500m. There is adequate snow even at much lesser altitude. Building infrastructures is favourable there even above the snowline for skiing and resort tourism. In Nepal, the snowline begins at 5,000 meters at the Himalayan range. At anything more than 3,500m, altitude sickness is a usual norm, building infrastructures less likely and  year-long tourism even less likely. Remoteness is another factor that hinders movement of people and logistics. But that is what spiritualism and adventure seekers crave for and it is where businesses can leverage upon.  

In addition to the natural advantage, Switzerland has better trade competitiveness, strong agricultural industry, a sophisticated banking system, robust infrastructures and skilled and disciplined workforce. These have complemented Switzerland’s tourism growth. On the other hand, Nepal’s tourism has always been promising while considering its population of around 28.5 million, almost thrice the size of Switzerland. Further more, Nepal has a sizeable young and vibrant population. It also has numerous economic implications - a promising domestic tourism market, potential for human capital and a greater domestic market for other industrial sectors around which tourism can grow.

Interestingly, Nepal and Switzerland are both landlocked countries, with strong world economies as their neighbours. Switzerland neighbours Italy, France and Germany - each of their per capita income (GDP nominal) is more than USD 30,000. But India and China, Nepal’s neighbors, aren’t impoverished economies anymore either. They have maintained a decade or more of strong economic growth making them a most talked about economies at international forums. Though their per capita income is not attractive at all , their population size is colossal. Almost half the world's population of seven billion are Nepal’s neighbours. Among them, the middle income populations are growing in number. So is their travelling enthusiasm and want for sophistication, a stimulating factor for substantial dollar expenditure. 

World Tourism Barometer of United Nations World Tourism Organization (UNWTO) reported that Chinese expenditure on international destinations in 2016 was USD 261 billion, leading the outbound tourism expenditure since 2012 and maintaining a double-digit growth in it since 2004. India, on the other hand, is also among the largest source markets. In 2015, the number of Indian outbound tourists was 20.4 million, an 11% upsurge from 2014 and it is expected to reach 50 million by 2020. These figures are staggering and compelling enough for any international tourism destination to devise strategies surrounding the growing Indian and Chinese outbound travel markets. Nepal and Switzerland, both are home to adventure tourism. In 2012, UNWTO reported an all-time record of one billion international tourist arrivals in 2012, with substantial growth in the adventure market as well. 

Altogether, it really must set high standards for Nepal. Disappointingly, there is a polar difference in the tourists they attract - Switzerland attracted around eight million tourists in 2014 while Nepal managed a meager number of 0.8 million (data before 2015 April earthquake compared to account the shock). It depicts the harsh reality of Nepal’s standing in the international tourism market and questions its determination for tourism development.

So, what are some of the issues that have caused such dismal performance of Nepal and where does it need to focus and revamp to unlock its true potential?

Unrealistic target, failed planning
Over the years, Nepal’s tourism planners seem absorbed on setting targets that are wishful thinking rather than based on market and ground realities. Almost 20 years ago, Nepal aimed at bringing 500,000 tourists in 1998 with ‘Visit Nepal Year 1998’ campaign (see graph on next page) but that goal materialized only after nine years after it was envisaged, almost a decade to cross the landmark. In hindsight, that doesn’t seem a badly failed campaign as it was third year into the Maoist conflict, tourism infrastructures were poor, private sector hadn’t matured and the world knew little about Nepal. 

Ten years after the Visit Nepal Year 1998 campaign, in October 2008, it planned for another similar campaign to be held after three years - ‘Nepal Tourism Year 2011’–hoping to attract a million tourists in 2011. The decision for the campaigning came after two years since Nepal crossed the half-a-million mark, though it already had begun declining in 2008. The campaign managed 73% of the target, less than what was achieved a decade ago. Even until 2014, just before the disaster struck, Nepal had attracted 800,000 tourists.

In 2012, Nepal took another ambitious target up its shoulders. The Ministry of Tourism launched ‘Vision 2020’ that targeted two million tourists by 2020. It was a concise vision document - ambitious in numbers, considering the 2011 mark sheet and the way politics was shaping. Four years later, the Ministry of Tourism launched National Tourism Strategy 2016-2025 that aimed attracting 2.52 million tourists annually by the year 2025, a target five times the tourist number that arrived in 2015 (initially the target year was 2023 but later revised accounting the 2015 earthquake). These numbers seem unrealistic in view of past experiences, existing institutions and infrastructures, recurring disasters and crises and persistent political instability. 

While there must be no issues with being ambitious, there certainly is with being unrealistic. It matters because continuous failure in achieving targets will ruin credibility in the long-term among businesses. It already has. Businesses view these numbers as a façade to hide what wrongs are conducted within tourism institutions. On the other hand, too high a target increases expectation and business confidence. In hopes that a certain number of tourists will arrive in Nepal in XYZ year, there are chances that investment and resources will converge around one sector. When the expectation is unmet, it may lead to unhealthy business practices. It partly explains, apart from the existing unemployment and the lack of productive areas to invest, why trekking agencies, tour operators and restaurants are mushrooming in the tourism hubs of Nepal and why there are untrained and unprofessional guides. This disproportion between supply and demand has diminished service quality, overlooked consumer welfare, brought prices down for Nepali industries, and deteriorated business environment and competency.

Now, is it logical to spend resources on setting ambitious targets and then planning on achieving what is unrealistic? It seems we have been doing that for the last 20 years without substantial results. Its economic costs must be overweighing the benefits and outcomes. It is advisable that  NTB should spend resources in developing a robust database of inbound tourists, tourism businesses and investment first - one that is granular in scope and useful to local governing bodies, policy-makers, market players and even to rural-based small business operators and individuals whose livelihoods depend on tourism. Or may be figuring out how seasonal tourism can be turned into a year-long tourism? Or persistently press the institutions concerned for rapid development of tourism infrastructures and anti-corruption practices. Or all of them.

Natural disasters: a recurring curse?
It won’t be wrong to assert that the Nepali tourism industry is beset by recurring natural disasters. Nepal’s tourism industry has an intrinsic element of disaster risk which most of the times turns fatal. It definitely is one of the crucial current challenges to Nepal’s tourism industry. In October 2014, rains induced by Hudhud cyclone took 43 lives of various nationalities (at least 21 foreign trekkers). Six months earlier, an ice avalanche in the Everest region killed 16 Nepali guides in the Khumbu Icefall. If they weren’t enough, a devastating earthquake in April 2015, that also triggered an avalanche in the Everest and Langtang regions, took many lives, terrorized people for months with recurring aftershocks, and crippled its economy including the tourism sector. 

What's more, there are yearly recurring floods and landslides in the hilly and Terai regions. In May 2012, a flash-flood in the Seti River near Pokhara caused death and disappearance of at least 72 people. Two years later in August, a heavy rainfall induced landslide blocked the Sunkoshi River and formed an artificial lake and killed more than 150 people. Come monsoon, and one will witness several parts of the Terai region inundated. Recent 2017 monsoon devastated the Terai region taking around 100 lives and destroying a lot of crops. Other than endangering lives, these disasters devastate tourism infrastructures and property - too exorbitant 
for an economy like Nepal to recoup. 

It is not rocket science to figure out why these disasters increasingly turn fatal. Nepal’s overall disaster preparedness is weak with dearth of qualified personnel, advanced equipment and technology and lack of robust mechanism and solid infrastructures to prevent and handle disasters and contain their deadly outcomes. It lacks modern communication infrastructures, advanced rescue equipment and vehicles, qualified rescue and administrative professionals, proper early warning systems and weather forecasting, robust and digital tourists’ database, rural disaster prevention infrastructures (for example: emergency shelters like mountain huts) and effective post-disaster coordination. TIMS and check-post data management, so far, has worked for us but trekking routes are still not suited with enough information centers and signage, porter shelters and safe houses.  Even the city areas aren’t prepared to cope up with disasters. Kathmandu, the capital city, is messed up with haphazard settlement, wild road traffic and no emergency resources. A few rescue helicopters and congested and unmanaged international and domestic airports at disposal will not be able to bear any mounting pressures. And it is unlikely that disasters like 2015 earthquake would be the last in Nepal.

In bad light!
For a ‘third-world’ country, Nepal cannot go along with the saying - any press is a good press, even a bad press. So how has it been faring in press headlines in recent time? And how has it responded to such international coverage?

The 2015 earthquake was a debacle to Nepal’s ailing tourism industry. News surrounding the earthquake and continuous aftershocks transmitted fear across tourists while wide reporting circulation asserted that almost everything was over in Nepal from temples to trails. Nepal stood out as an unsafe country with weak disaster preparedness. There was truth in some of them but not all. In response, the private sector spearheaded a ‘Nepal now campaign’, months later the earthquake, to revitalize tourism. But it was too late. Nepal’s image declined further due to its inefficient and corrupt governance practices. Major political parties and their honchos were lambasted in the social and mainstream media as they explicitly manifested incapacity, inaction and corruption in aid management and distribution. Two years later, ruins of the devastation are still on display, earthquake victims - poor and vulnerable - are still struggling to cope up with their daily lives while reconstruction of heritages is still in limbo.

Earlier, a Sherpa brawl incident that occurred at the highest altitude in 2013 captured international headlines with most of them referring to the narrative that hundreds of Sherpas almost killed three foreign mountaineers. Authorities in Nepal didn’t utter a single word in defense of their own industry as if there was only single version of the story. In 2014, post-Khumbu icefall avalanche that killed 16 Nepali Sherpa guides, the Sherpas rescinded the remaining work of the year to cope up with the tragic loss and as a protest against a meager offer of compensation to the bereaved families of the Sherpas. Apparently, international mountaineers were upset in view of hefty royalties they pay and the time they have to invest for mountaineering in Nepal. In between these incidents, in December 2013, European Union banned entire Nepal-based airlines from operating flights to EU countries citing poor aviation safety standards. Although Nepal doesn’t operate a single flight to any EU nations, it has been tainting Nepal’s image almost irreversibly. After three and a half years, Nepal is still in that blacklist.  

The question is where does all this put Nepal in the international tourism market? Cumulative effect of media circulation of these stories, frail responses against them and increasing disrepute in the market will only weaken Nepal’s credibility. 

Persistently failing tourism institutions
If one ponders the chronicles of Nepal’s tourism institutions, they will realize how appallingly these institutions have fared in the past decades as if it has always been their default way of functioning. Their resume boasts off a long list of failures, inefficiencies and scandals. 

For most of the period post-1990, Nepal Airlines Corporation (NAC), the flag carrier of Nepal, consistently succumbed to unscrupulous indulgences and interferences. Dhamija and Lauda scandals in NAC are epitomes of institutionalized corruption, the chairs at the top changed with the frequent change in government leadership and the airline swamped into financial losses and debt problems after exorbitant damage was caused to aircraft. A fact that NAC couldn’t purchase a single aircraft in 28 years, while domestic private sector airlines and international airlines thrived multifold in the later years, is evidence to its inefficiency, incapacity and myopic vision. For a land-locked country whose only direct international access  by aviation, it was virtually clogged for years with NAC flying to only four international destinations. A sign of hope – NAC finally bought two airbuses (narrow body) in 2015, and plans to buy two more airbuses (wide body) in the next two years. But what is an airline without a good airport?

Tribhuvan International Airport (TIA), the country’s sole international airport, is a story of misery -how a poor infrastructure can inflict shame to a poor nation. Frequently ranked as one of the worst international airports in the world, its overall management has been derided far across. Inability to maintain passenger and flight traffic, lack of staff professionalism, sanitation and hygiene at the airport, hassled customs checks and baggage clearance and pitiable security infrastructures have gained notoriety for the airport. Eighteen years ago, an Indian airline en route Delhi from here was hijacked. It must remain fresh in the Indian memory as the resulting negotiation led to the release of three high profile terrorists. As a consequence, Nepal faced suspension of Indian flights’ operation into Nepal for more than five months. It is tragic that Nepal’s airport security standards are still in a compromised state. For anyone who realizes the severity of international terrorism, it must be really worrisome. All Nepal really doesn’t need, at this point, is unfolding of some tragic event. 

Even if Nepal’s security infrastructures are managed, how will it handle a million tourists or more? It's only international airport already seems to be dying out of congestion. It was conspicuous during 2015 earthquake when international rescue planes and choppers rushed into the airport to aid Nepal and their citizens. Passengers, on the other hand, are either subjected to stroll Kathmandu’s sky due to airport congestion or are caught up at the congested terminal where flight delay notices run repeatedly and irritatingly. Nobody is seeking a sophisticated airport right-away but they need one that is well-managed and service-oriented. Rampant corruption and irregularities are the other facet of the TIA, so rampant that, in 2009, Nepal’s anti-graft body, the Commission for the Investigation of Abuse of Authority (CIAA) insultingly banned airport staff from wearing trousers with pockets in a bid to restrain corrupt practices.

Nepal Tourism Board (NTB), formed as an independent private-public entity, is the country’s top tourism promotional body. It doesn’t seem to be independent or corruption-free either. In 2014, news emerged surrounding millions of graft by it’s the then acting CEO and more than 20 NTB officials that included former CEO, government secretaries, tourism entrepreneurs and a director general of Civil Aviation Authority of Nepal (CAAN). Investigation into the corruption was led by the CIAA while the parliamentary Public Accounts Committee issued directives to suspend its acting CEO. After former CEO’s tenure expired in 2011, dispute among private sector representatives, bureaucratic hurdles and political interference in the board and a series of writ petitions in the Supreme Court against the CEO selection process (for bypassing the NTB Act 1997) halted the overall selection process. Amidst all the commotion, the institution remained deprived of its CEO for four years  leaving the institution paralyzed. Nepal has a long list of institutions where positions remain vacant for a long time and appointments are controversial. Sometimes, it is in much a vacuum that wrongs thrive. Not so surprisingly, it wasn’t the first time for NTB. In 2007, the board was unable to appoint a CEO for more than half a year.

Presently, Nepal Reconstruction Authority (NRA), a national body formed to lead post-earthquake reconstruction activities with international reconstruction funds, is treading a similar path. Setting up the NRA was difficult in the first place and subsequently, there was continuous political bickering over the appointment of its CEO among major parties. The reason it drew immense political interest must have to do with its authority to mobilize funds amounting to billions of dollars and the leverage it can bring to its political handlers. Consequently, in a matter of two years, NRA has already had three CEO appointments and so far only managed to face severe criticism for delayed reconstruction and rehabilitation process. 

Take note of marketing opportunities!
Nepal is also quite less on TV travel channels. But fortunately,  it received free promotion since 2015 when critically acclaimed and commercially successful  movies  were shot in Nepal.  SHERPA, a documentary movie highlighting a 2013 crisis between Sherpa guides and summiteers at Everest base camp against the backdrop of extremely risky profession of Sherpa guides, was released in 2015. In the same year, EVEREST, a movie about the survival of an expedition team members during 1996 Mt. Everest catastrophe was released at international theatres. The year 2016  too bought good news as Dr. Strange, a Marvel production super-hero movie featured Nepal. The two movies which boasted excellent cinematography into some of Nepal’s exotic locations grossed more than 700 million USD at international box office. 

Lessons can be learnt from New Zealand that reportedly doubled its tourist arrivals since the release of the Lord of the Rings trilogy in 2001 and then The Hobbit trilogy or Indian celebrities who are proactively fixated on getting Hollywood A-listers dance to their tunes in their domestic and international events, with a hope to take their movie industry to the global scale. What the Nepali tourism industry doesn’t seem to realize is the significance of Hollywood production and star values in promoting Nepal! In fact, bringing Indian celebrities and productions in Nepal and blending marketing agenda in their visit would alone prove beneficial if Nepal were to attract Indian globetrotters. Regrettably, there is hardly any initiative relating to these events to bask in any quantifiable benefits. As the competition in tourism market has grown fierce, one needs to attempt initiatives that may appear crazy. 

Applying unconventional seeming marketing ideas can be one of those ways. Megan Ellison, a film producer regarded as ‘100 most influential people in the world’ by the TIME Magazine in 2014 for her contribution in Hollywood industry, fittingly named her company ‘Annapurna Pictures’. Annapurna, as much difficult it is to ascend, resonated her aspiration to execute movies that appear risky to other production houses. She trekked the Annapurna circuit in mid-2000. Reportedly, Annapurna Pictures is also contending for the distribution rights of 25th Bond movie (James Bond Franchise) against Hollywood stalwart production houses like Sony Pictures, Warner Bros., Universal and 20th Century Fox. Imagine a Bond movie screening at thousands of international theatres with ‘Annapurna Pictures’ appearing before the show begins. Is there a branding opportunity? Does Megan’s story resonate with Steve Jobs spiritual visit to India? At least, can we bring her back to Nepal once again to narrate her connection with Nepal to the world? 

Here’s another one: Nepal and the UK have maintained an amicable relationship for centuries. The UK is one of the largest bilateral donors of Nepal while Nepali Gurkhas serve in the Gurkha regiment of the British army, a practice that has its roots in the 19th century. Three years ago, Nepal celebrated 200 years of Nepal-UK ties in London. Although the UK is an economic powerhouse, it has been some stressful years for UK citizens especially surrounding Brexit uncertainties. There can be opportunities in someone’s uncertainties. Nepal, renowned for raw hospitality, can be an ideal break-out nation for UK citizens exploring serenity. What else may engross UK citizens other than an old friend offering solace?

There are other critical issues too that will significantly affect tourism in the future: Kathmandu, Nepal’s capital city is insanely polluted and haphazardly managed; tourist hubs including natural and cultural heritages are depleting; national pride projects, reconstruction of heritages and other infrastructure development works are moving at snail’s pace; there is little incentive for entrepreneurship and lesser attention to ICT infrastructure at the national level; and domestic airports and road infrastructures are in a horrific state. On the other hand, the world is warming alarmingly, and the mountain country will have to bear its consequences gradually,  no matter what. 

For an aid-dependent country like Nepal, it all comes down to a vicious cycle of fiscal deficit, widespread corruption, infrastructure gap and persistent political instability to address any concerns that require resources. Yet little inventive tweaks in our approaches can become a game-changer for an industry that deserves better. And it is particularly expected from NTB whether in addressing worries arising from natural disasters and dilemmas about target planning or handling Nepal’s image and marketing Nepal or doggedly lobbying for tourism infrastructures or taking anti-corruption stances. In a year or so, we may reach the one million mark but with the ruins and scars we are left with, other milestones will become elusive too for another substantial period of time if status-quo persists everywhere.