Hotels multiply, raising hopes for tourism industry, national economy

Kathmandu,Dec,1: Nepal’s tourism and hospitality industry has seen a remarkable expansion in recent years, with the establishment of significant number of luxury accommodations, including five-star hotels. 

This signals not only the country’s increasing appeal as a global tourist destination but also a booming investment landscape in the hospitality sector. In the past few years, five-star hotels have opened across the country, attracting both international and domestic tourists seeking quality services and facilities.

Growing investment in hotel industry 

Opening of increasing number of five-star hotels obviously shows rising investments in the hospitality sector. Nepal’s strategic location between two of the world’s emerging economic powers—India and China—coupled with its rich cultural heritage, natural beauty and adventurous appeal, has drawn attention of global investors. Many international hotel chains and local investors are seen cashing in on this potential.

In the past few years, several new five-star facilities have opened their doors to guests, signaling a shift toward upscale tourism. Major cities like Kathmandu, Pokhara, Chitwan and Lumbini have seen opening of new hotels, said Binayak Shah, president of Hotel Association Nepal. 

These establishments offer world-class amenities, such as luxurious rooms, fine dining, spas, meeting and event spaces, and rooftop bars, among other premium services, catering to both high-end travelers and corporate clients.

According to the Department of Tourism, more than a dozen luxurious hotels, including four-star and five-star ones, were registered and came into operation in a year. 

Additional seven five-star and six four-star hotels came into operation in the last one year since October 2023. Five-star hotels such as Hotel Lhasa International, Lazimpat in Kathmandu, Akama Hotel, Dhumbarahi, Siddhartha International, Lemon Tree Premier, Budhanilkantha in Kathmandu, Hotel Forest Inn in Kathmandu and Hilton Hotel in Kathmandu have come into operation during this period. The latest was Varnabas Museum Hotel which came into operation in Kathmandu in March 2024. An investment of above Rs. 19 billion was made in these facilities.

Including these, about 23 five-star hotel are now in operation across the country. Besides, five-star luxury hotels such as Hotel Del' Annapurna and Hotel Shangrila are in reconstruction phase in Kathmandu while Hotel Fulbari of Pokhara has remained closed for a few years.

Currently, a total of three luxury boutique hotels of five-star standards --- Dwarika's Hotel, Basera Boutique Hotel and Varnabas Museum Hotel --- are in operation.

Likewise, Chitwan's first five-star 'Royal Tulip' resort, a brand of Louvre Hotel Group, with an investment of Rs. 1.5 billion, is all set to come into operation in Sauraha from January 2025.

According to the Department, during the last one year, additional five four-star hotels came into operation. They are Lumbini Green Resort Private Limited, Kapilvastu, Hotel Aikawa, Ratnanagar of Chitwan, Hotel Lo Mustang in Thamel of Kathmandu, Siddhartha Sunny Resort, Surkhet and Bhairahawa Garden Hotel. 

These five four-star hotels have an investment of around Rs. 2 billion. With these five, the number of four-star hotels has reached 37. 

Similarly, additional one four-star level heritage boutique hotel --- Square Hotel with an investment of Rs. 100 million --- came into operation in Lalitpur in last fiscal year. The number of four-star level heritage boutique hotel has reached four.

Besides, dozens of other star hotels are under construction and some are expected to be operational this year and some within one or two years.

The growing number of star hotels under construction and in operation signals a promising future for tourism in Nepal, said Shah. 

Similarly, attraction of international chain hotels is growing in Nepal which is positive for Nepal's tourism development, he said. 

Hotel Marriott, Hyatt Regency Hotel, Shangri-La Hotel, Radisson Hotel, Crown Plaza, Holiday Inn and Hilton are international five-star chain hotels in Nepal. Similarly, Sheraton Kathmandu Hotel is another international star hotel which is under construction with an estimated cost of Rs. 12 billion. The hotel whose construction began in 2014 is expected to come into operation in next two-three years. 

Rameshwar Shah, chairman of KTM Hospitality, said that domestic and foreign investors were encouraged to invest in the hotel sector as they saw a future in tourism sector over the years.

"The increase in the flow of domestic and foreign tourists after the COVID-19 pandemic has attracted investors to the hotel sector. Similarly, political stability and the low risk of investment in the tourism sector compared to other sectors have helped boom the hotel sector," he said. 

Stating that marketing is one of the major components of hotel and tourism sector, he said that the arrival of international chain hotels in Nepal is helping promote Nepal in the international market and bring in more tourists as well.

Kali Bahadur Bhujel, director at the Department of Tourism, said that attraction of the investors to construct hotels in Nepal is good as it has sent a message that Nepal is ready to welcome more tourists and provide quality services.

The trend of opening hotels is not limited to Kathmandu, new hotels are being opened across all seven provinces. Due to the policy adopted by the provincial governments to promote tourism, industrialists are expanding hotels in all seven provinces.

Expectation of rise in tourist arrivals

HAN President Shah said that investors are increasingly investing in hotels in the hope of generous rise in the arrival of tourists in Nepal.

"The future of Nepal's tourism and hotel sector is bright," he said, adding, "In recent times, billions of rupees have been invested in star hotels, many of which are being built with a professional plan, considering the future."

The newly-built Gautam Buddha International Airport in Bhairahawa and Pokhara Regional International Airport in Pokhara have also increased Nepal’s capacity of welcoming more tourists.

"The tourism sector in Nepal is an area of ​​comparative advantage. Nepal's tourism products are unique, which other countries like China and India do not have. As the economies of China and India are growing rapidly, the number of Chinese and Indian tourists is also increasing," said Shah.

According to the Nepal Tourism Board, about 941,000 tourists arrived in Nepal during the first 10 months of 2024.  Only around 810,000 tourists arrived in the first 10 months of 2023.

Over 124,000 foreign tourists have entered Nepal in the month of October 2024. The highest number of tourists - 128,167 - entered Nepal in the month of March 2024. The government has set a target to bring around 1.6 million tourists this year.

“The present growth of tourist arrivals in the country is not satisfactory and will not meet the target. The tourist arrival increased in the month of October this year compared to last year, but it is not the expected growth. The tourist arrivals in the country have not reached the mark of 2019 before the outbreak of COVID 19 pandemic,” said Mani Raj Lamichhane, Director of Nepal Tourism Board.

Nepal received the highest number of tourists of 1.19 million in fiscal year 2019/20 which plunged to 230,000 in fiscal year 2020/21 in the wake of COVID-19 pandemic. 

He said that it seems the NTB and the private sector should make efforts for marketing to bring more tourists from America and other countries.

Lamichhane stressed the need for improving the air and road safety to encourage foreign tourists to visit Nepal.

HAN President Shah, however, said the pace of work in infrastructure development such as road carried out by the government is slow which is hindering the plan of bringing in more tourists in Nepal.

He said that high airfares have also become a barrier to attract tourists to Nepal as tourists visiting Nepal have to spend 60 to 65 per cent of their budget on airfare.

Nepal’s hotels can accommodate over 3.5 million 

Nepal's hospitality industry is rapidly expanding, with available hotels having capacity to accommodate over 3.5 million tourists annually, said Shah. 

Surprisingly, there is no actual data of hotels operating in the country. Nepal Statistical Office is currently collecting actual data of hotels operating across the country.

Shah said that there are approximately 10,000 hotels across the country, ranging from budget accommodations to luxury resorts, ready to meet the growing demand of the international and domestic travelers. 

"Of around 10,000 hotels in operation, 5,000 are members of the Hotel Association Nepal. The members affiliated with the HAN alone have the capacity to serve about 3 to 3.5 million tourists. We are waiting for customers," he said. “Currently, hotels are operating at around 33 per cent occupancy," he said.

"About 200 million people from China and 100 million from India travel abroad annually. Therefore, India and China can be major markets for Nepal's tourism promotion. If Nepal can attract just two per cent of the Indian and Chinese tourists, Nepal's tourism sector will take a leap forward," he said.

There is no problem to bring in 5 million tourists by luring only Indian and Chinese tourists if government and private sectors work with combined approaches, he said

When Tribhuvan International Airport is operating at saturation, about 1 million to 1.2 million tourists have entered. If Pokhara and Bhairawa airports come into full operation, there is no difficulty in bringing in 2 million tourists.

About 1 million to 1.1 million people are directly or indirectly employed in hotels. The share of women workers in the total employment in hotel is about a one-third. 

The NTB is preparing a draft of Tourism Decade 2025-34 targeting to bring in around 3.5 million tourists yearly by 2034.

Impact on Nepal’s economy

The growth of five-star hotels and the influx of investment in the hospitality industry are expected to have a ripple effect on Nepal’s broader economy. 

The tourism sector is one of Nepal’s largest foreign exchange earners, and the expansion of luxury hotels is expected to increase revenue from tourism-related activities, said Shah.

Furthermore, the creation of new jobs in the hospitality sector, as well as the increased demand for local products and services, will stimulate Nepal's economy, especially in sectors like agriculture, construction and transportation. 

Not only billions of rupees have been invested in the hotel industry, but the hotel sector is also a sector that pays a lot of revenue to the government and contributes economically to the government by creating tens of thousands of jobs.

Additionally, luxury hotels have become key drivers of foreign direct investment (FDI), further enhancing Nepal's international profile as an investment-friendly destination.