Five-star hotels report drop in fourth quarter profits due to lockdown

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Five-star hotels in Nepal saw their profits plummet in the fourth quarter as the virus lockdown wiped out arrivals.

From March, the government ordered everyone back, closed borders and suspended flights for four months as the Covid-19 pandemic took hold. The result was a disaster for the tourism industry which came to a halt because there were no travelers.

The majority of luxury properties in the Kathmandu Valley reported zero occupancy and income during the March-May period, which is Nepal’s peak tourist season.

Among the three Nepal-listed hotels that released their financial reports for the fourth quarter ending in mid-July, Oriental Hotel Limited, which operates the five-star Radisson hotel in Kathmandu, tops the list of losers , followed by Soaltee Hotel and Taragaon Regency hotels.

Oriental Hotel announced a decrease of its net profit of 79.8% in fiscal year 2019-20 compared to the profit recorded in fiscal year 2018-19. The hotel said its after-tax profit fell to 62.2 million rupees during the reporting period, compared to a net profit of 308.5 million rupees in the corresponding period last fiscal year.

Oriental received revenue of Rs 690.4 million in the last fiscal year, compared to Rs 1.23 billion in the previous fiscal year. “The drop in net income is mainly due to the impact of Covid-19 and the government-imposed foreclosure,” he said in his unaudited financial report.

The hotel and tourism industry was hit hard by the lockdown which lasted from March 24 to July 21, insiders said. Even after the stay-at-home order was lifted, luxury hotels saw no improvement in their situation as tourist arrivals were limited.

Soaltee Hotel Limited said in its fourth quarter report that its net profit plunged 64.64% to 105.7 million rupees in the last fiscal year.

The company’s revenue from the transaction fell to 1.23 billion rupees in the last fiscal year, from 1.83 billion rupees in the previous fiscal year 2018-19, Soaltee said in its report. unaudited.

Taragaon Regency Hotel Limited, which operates the Hyatt Regency Kathmandu, released its fourth quarter report this week predicting a 53% drop in net income in the last fiscal year.

The hotel had made a net profit of Rs353.22 million in the previous fiscal year 2018-19, which fell to Rs165.61 million in the last fiscal year 2019-2020. Its turnover fell 39.28% to Rs852.6 million in the last fiscal year.

All hotels can report a net loss in the first and second quarters of the current fiscal year due to high operating costs against a backdrop of zero revenue, industry insiders said. But there is hope that Nepal’s hotel market will rebound to some extent in the third quarter, as most of the source markets have started vaccinating their citizens.

“People will travel once they are vaccinated. But there will be fierce competition among all countries, even developed countries, to attract tourists and boost their ailing service sector, ”said Binayak Shah, senior vice president of the Nepal Hotel Association.

“But we are not seeing Nepal preparing to compete for travelers, and this is of great concern to the entire hospitality industry.” He said the lack of promotion means it will take two years for the industry to fully recover.

As travel restrictions and lockdowns spread across the world, all hotels, including those in Nepal, were forced to temporarily close, put their employees on leave and cut wages and other costs.

In an effort to provide some respite for hotels and restaurants struggling to stay afloat after revenue evaporates, Hotel Association Nepal and restaurants have agreed on a uniform payment structure under which everything staff, from front desk clerks to general managers, received the same salary. The arrangement would apply from April 13 to December 31.

The containment has been devastating for the service sector which employs tens of thousands of people. According to the Immigration Ministry, tourist arrivals in Nepal fell sharply by 78% to 218,170 people in the first 10 months of 2020.

On March 12, the government decided to no longer issue tourist visas on arrival to nationals of all countries, in addition to canceling spring mountaineering expeditions, including the Everest missions. The decision came a day after the World Health Organization declared the Covid-19 outbreak a pandemic and urged countries to take precautionary measures.

From October 17, Nepal opened the door to hikers and climbers. According to the department, arrivals for October totaled 1,874 against 134,096 in the same month in 2019. Between April and October, 3,059 tourists visited Nepal.

The country received 1.2 million tourists last year and planned to increase this figure to 2 million by running the Visit Nepal 2020 campaign.

Since the end of July, tourism entrepreneurs have started wooing domestic visitors to make up for the loss of foreign visitors by reopening the mountains and hiking trails, the jungle safari and various landmarks to local travelers.

“The national tourist movement never happens in Kathmandu. People can travel to Pokhara, Chitwan and other places, but there is no sign of Nepalese staying and dining in five-star hotels in Kathmandu, ”said one hotelier, who declined to be named. “A few wedding ceremonies have occupied some luxury hotels, but the situation is worse than expected. ”

He said large properties in Kathmandu are surviving in the hope that tourists will return. “But things are still uncertain for luxury hotels. “


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