New Hotel Projects Amid the PANDEMIC

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New Hotel Projects Amid the PANDEMIC

The Covid-19 pandemic has hammered the hotel sector hard. But a few new hotels have come into operation and construction of some hotel projects is nearing completion even amidst the crisis.

--BY TAMISH GIRI

The once spectacularly booming Nepali hotel sector has gone through a tumultuous period after the start of the Covid-19 pandemic in early 2020 with waves of coronavirus outbreaks wreaking havoc on international and domestic travel and tourism. With the arrival of tourists plunging to the never seen before lows, hoteliers, who were hoping for a bumper business after the government announced the Visit Nepal 2020 campaign, have been forced to face the brutal reality of hotel closures and dismal business. This has prompted many existing and new investors to pull back from investing in new hotel projects. However, the construction of some hotel projects in different parts of the country has seen progress even during these challenging times.

Currently, Hotel Le Sherpa, Lazimpat; Hotel Krishna, Nepalgunj; Zinc Journey, Jhamsikhel; Holiday Inn-Jhamel, Lazimpat; Landmark Business Hotel, Narayanghat; Lemon Tree Hotel, Tripureshwor; Sheraton Kathmandu Hotel, Kantipath; Luxury Villa, Budhanilkantha; Dwarika’s Inn, Jhapa; Hotel Grand Prince, Jhapa; Siddhartha International Hotel, Bhairahawa; Pawan Palace, Bhairahawa; Hotel Garima, Itahari; Hotel Centurion, Biratnagar; Soaltee Pokhara and Hyatt Palace, Soalteemode are under construction.

In the meantime, CG Holdings is working on a 3-star resort project in Nagarkot --Bhangeri Durbar Resort-- which will be managed by the Indian hotel chain Lemon Tree Hotels. CG Holdings is also constructing the Lemon Tree Hotel, Holiday Inn-Jhameland a wellness retreat at Budhanilkantha.

Separately, the construction of Lemon Tree Premier is also ongoing in Biratnagar; Nepal International Hospitality Pvt Ltd is building the five-star property which is expected to open by early 2023.  

According to Binayak Shah, vice-president of Hotel Association of Nepal (HAN), there were more than 100 new hotel projects in different phases of development in various parts of the country in December 2019. “But the Covid-19 pandemic severely impacted the development of new hotel and resort properties,” he says, adding, “The construction of many hotel projects has halted as investors are waiting for the situation to normalise, but development of some projects has continued over the past year despite the problems caused by the coronavirus outbreak.” He thinks investors of those projects are planning to to take an early lead in market competition after normalcy resumes in the travel and tourism business.

The pandemic has affected the construction deadline of the hotel projects. For instance, the construction of the Kathmandu Sheraton Hotel is expected to be delayed by three years and is slated to be completed in 2022. The five-star property which will be managed by Sheraton Hotel and Resorts, a brand of Marriott International, has investment from Nepali-Australian tycoon Shesh Ghale. According to Kathmandu Sheraton’s Project Manager Suresh Chitrakar, 99 percent of construction has been completed so far and the interior work is going on currently. “With the Covid-19 pandemic creating serious disturbances in construction and other work and with the situation this year also looking bleak, it will be difficult to meet the revised project completion deadline,” he says.

The construction of Dusit Thani Himalayan Resort & Spa, the first property in Nepal to be managed by Thai luxury hotel chain Dusit Thani, has also been obstructed. The five-star resort, which is under construction in Namo Buddha, Kavre, was originally set to open at the end of 2020. It has now been rescheduled to November of this year. Ramesh Hamal, managing director of Omstone Asia, the company which has invested in the resort project, says that the new deadline could be pushed further if the construction work is delayed. According to him, the luxury mountaintop resort will have 44 well-furnished guest rooms and 20 exclusive villas. “The project’s physical progress so far is 80 percent,” informs Hamal.  

The Covid-19 related problems have also delayed construction of Dwarika’s Inn, an upcoming 5-star property in Birtabazaar, Jhapa. The hotel, which is owned by B&C Hospital owner Durga Prasad Prasai, is in the final phase of construction and had targeted to start its operation this year. Likewise, the opening of another 5-star hotel, the Hyatt Palace situated in Soalteemode, Kathmandu, has also been affected.  

With the pandemic affecting the construction and operation of the hotel projects, investors are facing additional financial burdens.  According to Chitrakar, the delay in the construction of Sheraton Kathmandu Hotel has already increased the cost of the project significantly. “The initial estimate of the project was Rs 8 billion which is expected to exceed Rs 12 billion,” shares Chitrakar. Hamal of Omstone Asia says that the delay in the construction of Dusit Thani Himalayan Resort & Spa and the rising cost of the construction materials and labour will significantly increase the cost of the project. “Given the current situation, our cost is likely to increase by more than 15 percent. The initial estimated cost was Rs 1.8 billion which will exceed Rs 2 billion,” he says.

But a few new hotels have managed to open even amid the pandemic. Ramada Encore by Wyndham Kathmandu Thamel opened in February of this year; the 90-room four-star property is managed by the American hotel chain Ramada. Similarly, the 3-star Hotel Wawa in Lazimpat and the 4-star Durbar Hotel and Residences in Thamel came into operation in January.

Meanwhile, Hotel Pawan Palace, Lumbini formally opened last year after the construction of the first five-star property in Lumbini was completed with an investment totaling Rs 2 billion. Likewise, the 3-star Hotel De Flamingo also opened in the second week of March at Jogikuti, Rupandehi. In Nepal, star hotels, boutique hotels and resorts are the main categories that accommodate affluent foreigners and domestic tourists. Besides such properties, tourist standard hotels as well as homestays offer their services to budget travellers.

According to the Tourism Department, currently, there are 12 five-star hotels in Nepal. Soaltee Crowne Plaza, Hyatt Regency, Hotel Radisson, Hotel Yak and Yeti, Hotel Shangri-La, Hotel Malla, Pokhara Grande, Soaltee Westend Premier, Tiger Palace Resort, Hotel Central Plaza, Marriot Kathmandu, and Aloft Kathmandu are the five-star properties. Meanwhile, the Everest Hotel shut down its operation after the 2015 earthquake and is yet to receive a five-star rating from the Department of Tourism. Likewise, Mechi Crown, the first five-star deluxe hotel in the country, is also waiting for the inspection to receive a grading.

Tourism and hotels are a crucial part of Nepal's economy and key generators of the country’s foreign exchange. Hoteliers say that the new hotel projects are at a big risk of losing their investments even without getting a chance to start, and that the government should generously lend its support to these projects. “The government talks a lot about FDI, but the reality is different.  Look at our situation, they should have at least waived the taxes and provided concessional loans which could have sent a positive message to investors around the world that Nepal is safe to invest in,” opines Chitrakar. 

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