Despite Current Challenges, the Overall Outlook is Positive

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Despite Current Challenges, the Overall Outlook is Positive

In recent times, a number of star hotels are being operated and built in the country. How do you see this significant development in the country’s hotel industry?

The increasing number of hotels is a clear indicator of heightened enthusiasm in their operations. This trend reveals a growing interest not only from international chain hotels but also from prominent business establishments in Nepal. Furthermore, it signifies a positive outlook for the long-term future of tourism.

Despite current challenges, the overall outlook is positive. The consecutive arrival of international chain hotels signifies a strong vote of confidence in Nepal's tourism, economic situation, and population. There's a prevailing belief that investing in Nepal will prove beneficial. This confidence can be attributed to our strategic location between India and China, both experiencing the fastest economic growths globally.

When people have the financial means, they tend to explore different places. Examining the 2019 statistics, approximately 200 million Chinese and 100 million Indians engaged in international travel. Even if only 2 percent of these tourists choose Nepal as their destination, the impact on the tourism sector would be substantial. This promising prospect has driven the recent surge in the operation and construction of star hotels in Nepal, reflecting the bright future anticipated for the country's tourism.

Is it possible for so many already existing star hotels and those being built and under construction to survive in the market?

Hotel businesses can thrive with ease. Even during the challenging times of Covid-19, domestic tourists played a crucial role in sustaining Nepal's tourism sector, benefiting hotels as well. The substantial number of domestic tourists is noteworthy. Currently, popular destinations like Dhulikhel, Nagarkot, and Pokhara are witnessing a consistent influx of domestic tourists, not just on weekends but also on weekdays. This trend serves as a robust indicator of our tourism strength.

Despite the government's current non-business-oriented policy, the situation is quite favorable. It holds the promise of becoming even better with a systematic and liberal government approach. Notably, there has been a gradual increase in tourists from America, Russia, and European countries, in addition to those from India and China. The survival of hoteliers is not overly challenging, given our strategic location between India and China. Crafting a policy that explicitly acknowledges and capitalizes on this advantage would ensure a thriving and content hotel business.

The hotel business, being a significant contributor to government tax revenue and employing over one million people, is well-positioned to thrive and contribute to the overall economic landscape.

When so many hotels are being built, how do you see the competition in the quality of hotels and services?

Every situation comes with its strengths and weaknesses, and it's important to address both. Let's begin with the challenges. One notable weakness lies in the outdated nature of the government's policies, rules, and action plans. The dynamics have significantly changed from the pre-Covid era to the post-Covid reality, demanding a more contemporary and adaptive approach. While Nepal has established standards for service and quality, it's crucial to recognize the global nature of the hotel business. In a competitive market, if guests don't find the service facilities they seek, they may choose alternative destinations over Nepal. Ensuring that our service facilities and quality meet or exceed expectations is paramount to attracting and retaining tourists.

A thorough review of policies, rules, and laws is essential. With the continuous addition of new hotels, it's imperative to enhance policies and regulations, particularly those hindering the establishment of straightforward infrastructures such as air connectivity and transportation. Failing to address these issues may lead to a recurrence of the challenges faced when hotels were closed during the People's War. To prevent such a scenario, the government must intervene with targeted policy measures.

The government currently overlooks the hotel sector as an industry. It is crucial for the government to acknowledge hotels, which operate with significant investments, as a vital industry. By providing subsidies to these establishments, the government can play a pivotal role in strengthening the tourism sector and fostering its growth.

In recent times, star hotels, especially four-star hotels, have been operating in places outside Kathmandu, and significant star hotels have been operating in cities like Nepalgunj and Birgunj. How did this expansion of hotel operations come about? How do you explain it?

Casinos play a pivotal role in driving the operation and construction of star hotels outside Kathmandu, particularly in Nepalgunj and Birgunj. These locations boast a robust casino market, attracting Indian nationals who find it convenient to engage in gaming activities and return on the same day. Additionally, Birgunj serves as a major commercial hub for Nepal, handling the entry and exit of goods, thus fostering numerous economic activities. When businessmen visit Birgunj, they seek entertainment and quality accommodation, creating a high demand for hotels in the area. The presence of large industries in the Simra industrial corridor further contributes to the opening of numerous hotels in Birgunj.

Indian groups traveling to Kailash Mansarovar typically transit through Nepalgunj, proceeding to Simikot by plane. Simikot serves as a convenient gateway to Mansarovar through Tibet. With the adoption of the federal structure in Nepal, there has been a noticeable surge in economic activities and urban development in these regions. These factors contribute to the growing demand for hotels in these areas.

What do you think the government has done so far to revive the hotel industry after Covid-19 and what needs to be done?

Currently, our hotel sector witnesses significant investments. Recently, a delegation from Bhairahawa hoteliers visited Kathmandu. The absence of international air connectivity to the Bhairahawa international airport has put businessmen in a challenging position. Hotels, established with substantial investments and considering the international airport, now face the threat of closure. In response, the government should address the precarious situation of these hotels through policy measures, advocating for a business-oriented or liberal policy, which is currently lacking in the existing laws. The key element here is the timely implementation of effective policy interventions.

The development of the hotel business without tourists is difficult. What should the government actually do to bring in tourists? 

Relying on traditional methods from the past won't be enough to attract tourists. It's crucial to devise new, innovative plans. Mere mentions of our mountains, Pashupati Temple, and Lumbini won't suffice; we need a fresh perspective. Nepal can position itself as a preferred wedding destination, particularly for foreigners, with a special focus on promoting this aspect. Similarly, there should be a concerted effort to prioritize Meeting Incentive Conference Exhibition (MICE) tourism, given its diverse branches and involvement of various agents. Crafting policies and rules to support this initiative is imperative. Taking a cue from countries like Thailand, Nepal, too, should enhance its appeal for destination weddings. It should issue a welcome letter to the bride and groom, as done in Thailand. In Thailand, such brides and grooms don’t have to wait in line at the airport for hours. We should be able to do the same. This small gesture can significantly improve the overall experience for visitors.

Following the Covid-19 pandemic, new tourism concepts such as eco-tourism, bird tourism, sports tourism, butterfly tourism, flower tourism, mushroom tourism, and adventure tourism have gained traction. It is essential to actively promote these initiatives through well-crafted policies to diversify and rejuvenate the tourism sector.

The government has announced a tourism decade from 2023 to 2033. It has also targeted to bring in a million tourists in 2023. How has the hotel sector taken these initiatives? 

Despite the inclusion of the 2023-2033 tourism decade in the government's master plan, a year has passed without the implementation of any strategic programs. The absence of clear programs and budget allocations raises concerns about the government's commitment and seriousness toward the tourism sector. While the private sector actively engages in various initiatives, the government's role should be to facilitate and implement the outlined strategies. Unfortunately, this is not happening.Additionally, the government should focus on managing smaller details, such as improving roads and maintaining cleanliness. These seemingly small aspects contribute significantly to the overall tourist experience. The government is capable of swift action, evident when constructing structures for VIP visits. There needs to be a strong commitment from the government, with policymakers understanding the challenges and actively involving the private sector in the formulation of policies and plans. 

What about the banks’ investment in the hotel business?

The standard format for investment in the hotel business by banks used to be 80/20, where the equity promoter invested 20 percent, and the remaining 80 percent was provided by the bank as a loan. However, there has been a shift, and the current format is approximately 70/30, indicating that the equity promoter's share has increased to 30 percent, while the bank's loan investment has decreased to 70 percent. 

Lately, the activities of domestic tourists have increased. How has it affected the star hotels? What is the current status of domestic tourist occupancy in star hotels?

Domestic tourism serves as a robust and foundational pillar for tourism development in any country. A strong domestic tourism sector is indicative of a robust overall tourism industry. International tourists, when added, contribute to this strength. It's encouraging to note the growing strength of domestic tourism in our country, presenting a positive outlook for the hotel industry. 


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