Despite encouraging investment, fall in tourist inflow and lack of infrastructure worrying investors

3rd Aug, 2017 | Tourism Mail Crew

KATHMANDU, August 03: Hotel business considered a strong base for the development and expansion of tourism has seen an encouraging investment lately.

The lucrative business has attracted many reputed organisations or big multinational companies like the Chaudhary Group, Golchha Organisation, Hilton Hotels & Resorts, Marriott International, which have invested a large portion of money in hotel with the hope of a good return.

The Himalayan country has a large number of international standard tourist hotels ranging from general to star. While more well-equipped and international standard tourist hotels across the country are in the pipeline. Most of them entirely thrive on tourists- domestic or foreign.

The investors and tourism entrepreneurs are however worried as they said their investment is at risk due to a lack of the assurance of a good inflow of tourists and enough tourism infrastructures. The situation has multiplied following the earthquake of April, 2015 that has affected tourism, contributing a significant fall in the arrival of tourists in the following months and even now to some extent. Still now, a lack of publicity and awareness has also caused those aspiring to visit Nepal to get false information that Nepal is still not safe place to visit following the quake.

According to the Hotel Association Nepal (HAN), more than Rs 300 billion has been invested in hotel business in Nepal. There are a total of 38,000 hotel beds at present while it aims to add more 4,000 beds by 2020. Likewise, the government has set a plan to get the number of tourists to two million by 2020.

Although the increment of investment in hotel is good news, there is always greater chance of investment being at risk for want of adequate infrastructure, said HAN President Amar Man Shakya.

"Big hotels have invested money taken out as bank loan. It is difficult to attract tourists until the government facilitates by building infrastructures like airport, roads and hotels. It will also be difficult to fill hotel rooms in the absence of tourists. Investment is also at risk of sinking if the situation remains as it is now," he said. The occupancy is only 70 percent and competition will increase if big hotels are added, he added.

Despite carrying both opportunities and challenges, investment in hotel could be at a risk in the present situation if the infrastructure is not prioritised, said tourism entrepreneur Yogendra Shakya.

"Hotels and resorts are being opened with investment from bank loan. How to pay the loan if tourist inflow declines? Not only hotel business, banks are also at risk of sinking," he added.

Scores of big new hotels and resorts are opening in big cities like Kathmandu, Pokhara, Chitwan and Lumbini, according to HAN.

According to latest data with the Department of Tourism, there are a total of 585 hotels registered across the country with 29 star hotels in Kathmandu valley alone (11 five star, seven four star and 11 three star). They include 10 five star, three four star, 31 three star, 43 two star, 33 one star and 465 international tourist standard hotels.

The increment in hotel investment is an encouraging sign for tourism sector, said Bishnu Prasad Regmi, Director for hotel section at the Department.

Five proposed star hotels in Kathmandu are City Hotel in Kalimati, Crown Imperial in Rabi Bhawan, Everest Hospitality in Naxal, Jagdamba Hospitality in Naxal and Akala Hotel in Dhumbarahi and Hotel Le Sherpa. Likewise outside of the valley, five star hotels include Hotel Tiger Wan in Rupandehi, Hotel Pawan Palace in Lumbini, Vegas City Entertainment and Hotel Mechi Crown in Jhapa.

According to HAN General Secretary Binayak Shah, international standard chain hotels and big entrepreneurs have invested in hotel. Approximately Rs 57 billion investment has been added in new hotels.

At present, at least 10 hotels are under construction across the country and they will be completed by 2019.

Sheraton Hotel is being built with the investment of around Rs 12 billion by MIT Group Holdings that belongs to NRNA President Shesh Ghale. Its completion will be over by 2019, the contractor said.

The under-construction a five star hotel at Chhayadevi Center in Thamel costs around Rs 5 billion and it will come into operation by 2018.

Marriott Hotel being constructed in Naxal with the investment of approximately Rs 4 billion will be operated by 2019. Five star Tiger Palace is being constructed in Kotihawa in Rupandehi by Hong Kong's multinational company Silver Heritage Group with the investment of around Rs 3 billion. Five star Bodhi Redasan Hotel at Balapur in Bhairahawa is ready to operate. Efforts were on to open Nansa Hotel and Pawan Palace in Belahiya. The project has an investment of millions of rupees. They will be completed by 2019.

Fall in tourist inflow taking toll

According to the Ministry of Culture, Tourism and Civil Aviation, a total of 729,550 tourists visited Nepal in 2016 while the figure was put at 538,970 in 2015. The highest number of tourists visiting Nepal was 830,092 in 2011 (Nepal Tourism Year). Likewise, 2012 witnessed the arrival of tourists numbered 797,616.

100 billion investments in hotel in Pokhara

According to RSS's Pokhare's correspondent Basudev Poudel, Pokhara has a total of 100 billion investments in hotel. The Lakeside has two five star hotels, 14 three star hotels and 400 international standard tourist hotels, said Bharat Raj Parajuli, Vice President of the Pokhara Tourism Council.

With the beginning of the arrival of hippies in 1960, the Lakeside started attracting tourists. The 1980 onwards has seen a booming inflow of tourists. An average of around 650,000 visited Pokhare every year before the earthquake of April 2015. The figure has dropped to 350,000 however after the quake, said Parajuli. Around 45 percent of tourists visiting Nepal reach Pokhara.

Wait-and-see situation in Chitwan

The flow of tourists to Chitwan has declined particularly following the blockade, quake and bad situation of road along Narayangadh-Mugling Highway due to the road widening drive. It has also discouraged big investment in hotel. Various facilities provided by the Chitwan National Park (CNP) like Jungle Safari are major attraction of tourists, both domestic and foreign. According to Chairman of the Regional Hotel Association, Sauraha Suman Ghimire, investment in hotel has declined since the quake struck. Approximately Rs 8 billion has been invested in hotel in the district except for land on which the hotel buildings have been built, he said.

Likewise, hotels are being opened in Jagatpur and Patihani with the investment of a total of around Rs 350. According to RSS's Chitwan correspondent Narayan Adhikari, the process is underway to open new international standard tourist hotels in the vicinity of CNP and buffer zone community forest. Chitwan has big hotels like Barahi in Meghauli, Meghauli Serai, Tigerland Safari Resort in Jagatpur, Jungle Villa Resort, Kasara Resort, Landmark Forest Chitwan, Green Park Chitwan and Hotel Seven Star. Hotel Barahi that has come into operation lately has more than Rs 300 investment, said its managing director Biplav Poudel.

(Translated by Pritam Bhattarai)