Nepalese luxury hotels struggle to recover despite massive losses


Travel restrictions and an economic downturn triggered by the Covid-19 pandemic have taken a heavy toll on luxury hotels in Nepal, decimating revenues and profits, and the dazed hotel industry is still struggling to recover. amidst huge losses.

Upscale hotels across the country posted the highest losses on record in the fiscal year ended mid-July; and based on the current scenario, mainly tourist arrival figures, the industry could take up to two years or more to return to pre-Covid levels, according to insiders.

“The hospitality industry has been left in a state of utter disarray. It will take years for the sector to recover, ”said Yogendra Sakya, a hotel entrepreneur. “If there is no new variant, we can expect a rapid recovery within two years. It will depend on the vaccination campaign.

But amid the gloom, there is a silver lining as more and more free independent travelers from the United States and Europe come to Nepal despite warnings from their governments.

“They are ‘cowboys’ who love adventure travel, whatever the circumstances.”

Nepal’s hotel business has suffered a prolonged recession due to global travel restrictions.

This is clear from the financial reports of the three hotels listed on the Nepal Stock Exchange. Hoteliers stated that the location of these Kathmandu-based hotels gives an authentic picture of the situation of other luxury hotels and resorts.

According to the fourth quarter 2020-2021 financial reports closed in mid-July, Oriental Hotel Limited, which operates the five-star Radisson hotel in Kathmandu, was the big loser as the property was closed for almost a year.

In its financial report, the hotel said it recorded a net loss of Rs 260.47 million in the last fiscal year. The hotel’s net profit plunged 489%, according to its financial statements.

The hotel’s total income or revenue in the previous fiscal year 2019-2020 was Rs 599.36 million, which fell 89.50% to Rs 62.69 million.

“The government imposed the lockdown on March 24, 2020 and continued it until July 21. Although hotels have been allowed to operate following health safety protocols, the number of tourists has fallen to its lowest. All meetings and conferences were restricted, which resulted in the complete closure of the hotel, ”the hotel said in its financial statements.

“The hotel must have suffered almost zero income during this period. As the government has announced the vaccination of most of the population by April 2022, we expect the tourism industry to return to its pre-Covid level. “

Pawan Rajbhandari, director of sales and marketing at Radisson Hotel Kathmandu, said the hotel’s average daily occupancy rate currently hovers around 20%, following the reopening of the tourism sector in September. “It’s the survival of the fittest for hotels.

On September 23, Nepal dropped the seven-day quarantine requirement and resumed issuing visas on arrival to all vaccinated foreign travelers in a bid to revive its virus-ravaged tourism industry.

Travel and tourism businesses, which accounted for around 8% of the country’s gross domestic product and directly and indirectly provided more than 1.05 million jobs before Covid, have been hit hardest after restrictions took effect trip at the end of March last year.

Rajbhandari said booking requests have been encouraging. “The government’s announcement about the reopening was a bit late.”

He said the UK government’s statement removing Nepal from its law-free zone will boost the tourism industry.

As of October 11, arrivals from 47 countries, including Nepal, to the UK will no longer have to enter hotel quarantine. They will only have to do a PCR test by day 2 at the latest.

After the Radisson Hotel Kathmandu, the Soaltee Hotel experienced the largest drop in revenue. The hotel recorded a net loss of Rs 186.04 million in the last fiscal year, compared to a net profit of Rs 112.04 million in the previous fiscal year.

Total hotel revenue was 1.26 billion rupees in 2019-2020, which fell to 431.37 million rupees in the last fiscal year, a fall of 65.87% year-on-year.

The hotel operates under its brand The Soaltee Kathmandu after the management contract with Holiday Inns (China) of the Intercontinental hotel group ended on May 14, 2021. The hotel said it expected some recovery during this exercise due to vaccination. drive, although the risk of the new variant remains.

Taragaon Regency Hotels posted a net loss of Rs 49.64 million in the last financial year, compared to a net profit of Rs 177.41 million the previous year. The hotel said that until the entire population is vaccinated, Nepal’s tourism sector will not recover.

Taragaon’s annual income fell to 283.22 million rupees in the last fiscal year, compared to 1.02 billion rupees in the previous fiscal year 2019-2020.

“The Covid-19 pandemic has reduced the number of travelers, the country has observed an increase in the number of hotels. The country lacks adequate tourist infrastructure. There is a fluctuation in the exchange rate. All of these factors have affected the industry, ”Taragaon Regency said in its financial report.

Nepal, dependent on tourism, welcomed 230,085 foreign tourists in 2020, a drop of more than 80% compared to 2019, which is reminiscent of the 1986 arrival figure. In September, the total international arrivals in Nepal reached only 76,864 people.

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