Attacks on International Hotels Raise Fears for Nepal’s Tourism and Foreign Investment

Targeted attacks on major international hotel brands during the recent Gen Z protests have alarmed tourism stakeholders and foreign investors, who warn of lasting damage to Nepal’s hospitality industry and investment climate.

The violence, which followed state crackdowns on demonstrations, left two leading foreign-branded hotels badly damaged: the decades-old Hyatt Regency and the Hilton Hotel, which opened only 18 months ago. Videos of flames engulfing the Hilton’s prominent glass tower went viral on social media. Hotels in the tourist city of Pokhara also suffered vandalism and arson. The Hotel Association Nepal (HAN) estimates nationwide losses at around Rs 25 billion across nearly two dozen hotels.

“This level of targeted assault on major hotels is unprecedented,” said Bishwesh Shrestha, managing director of C & K Nepal Trek. “Even during the decade-long armed conflict and frequent strikes, large hotels and green-plate tourist vehicles were spared. This sends a troubling signal to international visitors.” Shrestha added that guests at the Hilton, Hyatt, and several hotels in Pokhara have departed with negative impressions.

Nepal Tourism Board (NTB) reported that roughly 35,000 foreign tourists were in the country during the unrest.

Nepal has recently seen a surge in investments by international hotel chains. The Soltee Hotel now operates as part of the Autograph Collection, while Hilton Hotels & Resorts manages a portfolio in over 140 countries and Hyatt Regency serves more than 200 locations across 40 nations. NTB CEO Deepak Raj Joshi warned that arson targeting multinational chains will force investors to reconsider Nepal’s stability and said a recovery strategy is being developed to counter negative perceptions.

According to the Department of Industry, the last fiscal year (2024/25) saw foreign investment commitments worth Rs 26.82 billion across 304 tourism-related projects, nearly matching total existing foreign direct investment (FDI) in Nepal’s accommodation and food service sector. Nepal Rastra Bank (NRB) data show the service sector holds 40.5 percent of all FDI stock, with accommodation and food services alone accounting for 6.5 percent. FDI stock in this segment climbed from Rs 13.88 billion in 2021/22 to Rs 18.54 billion in 2022/23 and reached Rs 26.90 billion in 2023/24.

Economist Deependra Chaulagain cautioned that the September 9 attacks on hotels and other private enterprises will dampen both foreign and domestic investment. “Business owners are optimistic about rebuilding, but major new investments over the next two years are unlikely,” he said, noting that investors hesitate where the state cannot guarantee security of property.

Economist Keshav Acharya added that the greater challenge is breaking the current sense of uncertainty. “Fear is suppressing both foreign and local capital, and the destruction has raised the risk of capital flight,” he said, predicting declines in government revenue, excise collections, and corporate taxes as damaged factories struggle to recover.