Throughout much of its 50 year history, Nepal's modern tourism has been the envy of the world, producing great memories for those who come here. But the country has not been able to reap the benefits from the tourism business as it should have. Now the time has arrived for the Himalayan nation to explore new possibilities in the tourism sector for optimal benefits.
--BY SANJEEV SHARMA
The years since 2015 are considered to be historic for the Nepali tourism sector. The years marked the golden jubilee celebrations of some important hotels and tourism related organisations that have been pivotal for the institutional development of the tourism sector in Nepal. Soaltee Hotel, Hotel Association Nepal (HAN), Nepal Association of Tours and Travel Agents (NATTA) all celebrated their 50th anniversary in 2016, while the Kathmandu Guest House (KGH) is about to celebrate its golden jubilee in a few months time. Back in 2015, Hotel d l’ Annapurna crossed 50 years of doing business in the hotel sector.
The celebrations indicate that the Nepali tourism industry is maturing with time, becoming stronger and managing to survive though various critical periods over the years. “Fifty years is a lifetime. We have survived, that itself is a mark of achievement,” remarks Prabhakar SJB Rana, Chairman Emeritus of the Soaltee Hotel Limited. “Despite going through many difficulties over the years, we survived without lowering the quality of our service.” Founded by the late prince Himalaya Shah and late princess Helen Rajya Laxmi Shah, Soaltee Hotel has been at the forefront of Nepal's hospitality business since its establishment in 1965.
Then and Now
The Nepali travel and tourism business has considerably evolved over the past five decades. From the arrival of tourists to the expansion of hospitality businesses and incorporating new and emerging trends, the sector has seen a sea change over the past half century. HAN, which was established in 1966 by eight hotels, now represents around 1,000 hotels. The eight founding member hotels of the association include Soaltee, Annapurna, Malla, Shanker, Paras, The Royal, Coronation and Everest View.
It was in 1951 when the Russian hotelier Boris Nikolayevich Lissanevitch laid down the foundations for the modern hotel industry in Nepal with opening of The Hotel Royal. “At present, we have almost 1,000 quality hotels, 23,000 rooms and more than 35,000 beds altogether,” informs Amarman Shakya, President of HAN. The Kathmandu valley-centric hotel industry has been observing some major changes in recent years. “Earlier, we used to have the large hotels only in places like Kathmandu and a few other cities. Now, boutique hotels are opening in the capital valley and other parts of the country,” mentions Rana. Similarly, the number of tourists visiting Nepal has also gone up significantly compared to the earlier years. Likewise, the number of travel and tour operators has mushroomed since the establishment of NATTA in 1966 by a handful of travel and tour agents. The association now represents over 500 leading travel and tour agents in Nepal. Meanwhile, the airlines business has also expanded its wings over these years. The airline sector began to gather upward momentum after the foundation of the national carrier Nepal Airlines Corporation (NAC) (then Royal Nepal Airlines Corporation) in 1958. Now there are 14 domestic airlines and 24 international airline companies operating here.
Various factors have contributed to the changes that have occurred in the travel and hospitality business. The increasing number of tourists visiting the country has been one of the major factors. Tourist arrivals, for instance, which was 9,388 in 1965, crossed 700,000 in 2016. With its scenic beauty, vast natural and cultural diversity, from the Himalayas, high hills and Terai plains, Nepal has maintained its reputation as one of the world's go to countries for many decades regularly bringing in visitors to marvel at what the country has to offer.
“In these 50 years, a perception has been created that Nepal is a tourism capital of South Asia among the people in this region,” opines Deepak Raj Joshi, CEO of Nepal Tourism Board (NTB), an autonomous body formed in 1998 in the public-private-partnership (PPP) modality to promote Nepal as a quality destination in tourism. According to him, tourism in Nepal began with the start of modern tourism in the world 50-60 years ago. “Another reason making our country a popular destination has been the joint tourism packages of Bhutan, Sikkim, and the Tibet autonomous region of China that are created keeping Nepal in mind,” he adds.
Domestic tourism has also flourished over these years. In the recent years, there has been a noticeable rise in the number of Nepali backpackers and holidaymakers who travel to different parts of the country.
Tourism: An Economic Backbone
As per a World Trade Organisation (WTO) finding, one tourist creates jobs for 12 people directly or indirectly. A major source of foreign currency earnings, the travel and tourism business has been strongly contributing to the Nepali economy. The sector’s direct contribution was Rs 83.7 billion or 4.3 percent of the country’s GDP in 2014. In 2015, the amount was Rs 85.3 billion accounting for four percent of the GDP. In 2016, it is expected to grow to Rs 91.3 billion or seven percent of the GDP. A 2016 World Travel and Tourism Council (WTTC) report ranks Nepal third among 184 countries in terms of direct contribution to the GDP by travel and tourism. WTTC in its report forecasts that the direct contribution of the sector will grow by an annual rate of five percent to Rs 149.4 billion or 4.7 percent of the GDP by 2026.
Travel, tourism and hospitality businesses have done its fair share when it comes to creating jobs. “The Nepali hotel industry has provided employment opportunities to more than 500,000 people,” estimates HAN president Shakya. According to the WTTC report, travel and tourism sector generated 426,500 direct jobs which accounts for 3.2 percent of the total employment figures in the country. The report estimates the figure to have grown by six percent to 452,000 in 2016. WTTC predicts that the sector will create 654,000 direct jobs by 2026 increasing by 3.8 percent yearly.
After remaining on the wayside for over a decade due to insurgency, political instability, acute power shortages and labour related problems, investment in travel and tourism in Nepal has been constantly on the increase in recent years. Investment stood at Rs 15.2 billion in 2015, of which the government contributed Rs 10.9 billion. The hotel industry in particular has become a centre of attraction for new investment lately. In 2016, Nepali and foreign investors floated plans to invest Rs 60 billion in different hotel projects. It is estimated that Rs 300 billion in the hotel business till date. Various globally renowned hotel chains are entering or re-entering here partnering with large Nepali business houses and the Nepali Diaspora to manage and invest in different hotel projects. The iconic Indian hotel chain Taj Hotels Resorts and Palaces, for example, re-entered Nepal in April 2016 partnering with the CG Hotels and Resorts to operate the Meghauli Serai Jungle Lodge located at Chitwan. Taj till mid-2000s used to manage the Annapurna Hotel. Meanwhile, CG Holdings run by Managing Director of Chaudhary Group Arun Chaudhary in April 2016 signed a management contract with the British multinational hotels company InterContiental Hotels Group (IHG) for a 200-room five-star hotel that will be constructed at Jhamsikhel, Lalitpur and will be operated under the Holiday Inn brand. The hotel will be built by 2020. Arun Chaudhary last year announced to spend Rs five billion in five hotel projects.
Similarly, the US hotel chain Sheraton, a brand of Starwood Hotels and Resorts Worldwide, will enter the country after a considerable gap with the opening of the 218-room Sheraton Kathmandu Hotel in 2018 which is currently under construction at Kantipath, Kathmandu. Sheraton will be managing the five-star property owned by the Australia-based Nepali entrepreneur Shesh Ghale’s MIT Group Holdings. The company plans to invest Rs eight billion in the hotel project. Thai hotel chain Dusit Thani will be in charge of the management of the Annapurna Hotel. As per the plans, the company will invest Rs five billion in the hotel for renovations along with the construction of a 100-room new wing.
Nepal Hospitality Group (NGH), a part of the MS Group is slated to open a 108-room three-star property Fairfield by Marriott Kathmandu which will be managed by the US Hotel chain Marriott. The company has already invested over Rs 700 million in the project. NGH is also constructing a 221-room five-star hotel under the management of Marriott at Naxal, Kathmandu with an investment of Rs 2.5 billion. Aloft Hotels, another brand of Starwood Hotels and Resorts Worldwide is also in the hospitality business race in Nepal. The chain will manage a 140-room deluxe hotel which is being built at the Chhayadevi Center located at Thamel. Likewise, Ajaya Sumargi’s Muktishree Group has been planning to open a 250-room hotel at Bishalnagar, Kathmandu joining hands with a European hotel chain. New hotels are also being constructed at places including Pokhara, Chitwan and Lumbini. Meanwhile, Soaltee Hotel Limited has also expanded its arms with the construction of a new four-star hotel at Nepalgunj with an investment of Rs 550 million. The hotel which is said to be almost completed is slated for a soft launch within the next few months. It is said that nearly 10,000 hotel rooms are under construction at various parts of the country, of which 4,000 are star rooms.
Meanwhile, the travel and tourism business has also become a top investment avenue over the past few years. As per the Department of Industry (DoI), the total number of registered tourism sector companies stands at 1,302 with investment totaling Rs 90.96 billion providing employment to 53, 613 people as of FY 2015/16. As per the WTTC, Nepal is the 29th attractive destination in the world for investment in travel and tourism business.
Excess to Worry About
Nevertheless, tourism sector experts caution on such investment frenzy. “The excess of capacity in many areas of tourism has created cut-throat competition among the businesses which is a major contributing factor for the lower rates of services,” says Karna Sakya, Founding Chairman of the legendary KGH Group of Hotels. “I suggest the government to regulate the sector to ensure the sustainability of the tourism sector.”
The seasoned hotelier and famed entrepreneur points to the inability of the Nepali tourism sector to add value in this regard. “We have not been able to add value to the tourism business despite the sector’s growth. The trekking charge per person 40 years ago, for instance, used to be around USD 90 which is now USD 30-35 despite the fact that the costs of all goods and services have sharply gone up over these years,” he mentions, adding, “Proper arrangements and management of resources are necessary to add value to any business.”
Other tourism entrepreneurs and experts agree with Sakya’s views. “I see this as a problem for the industry at a certain time,” opines Prabhakar SJB Rana. “We have the tendency of jumping in a business that seems to be successful without properly assessing and identifying if such a success is long-term or not,” he adds. According to him, the repercussion will be that the industry will have excess capacity due to an inability to bring in the targeted number of tourists. “We have been targeting the one million-tourist mark for so many years. And it is sure that we won't reach the target for another couple of years due to certain reasons like poor infrastructure and other essential things required for fostering tourism,” says Rana. “Just look at the Tribhuvan International Airport’s (TIA) deplorable condition,” he points out.
How to Attract More Tourists?
The government for years has been missing its target of welcoming one million tourists in the country which it sets every year. But little soul-searching has been done to find out why fewer tourists visit Nepal despite the country’s immense potential to attract visitors. Experts stress on the need for new and innovative tourism products to lure more visitors. “Tourism is ever changing and never ending. We need to have an eagle eye view to observe the history, legacy, boundaries and opportunities of our tourism sector,” thinks Karna Sakya. According to him, new packages related to adventure tourism, extreme sports and festivals need to be developed to increase the number of visitors. Besides the older products of mountaineering and rafting and the relative newer packages of paragliding and bungee jumping at limited places, Nepali tourism does not have many products to excite visitors. “We can devise new tourism products in caves, lakes and waterfalls segments,” suggests KGH founder Sakya. “We have an abundant amount of such places that can be developed as new avenues of tourism,” he adds. He also suggests that the country's colonial era palaces could be made into a new product. “Various palaces constructed during the Rana regime can showcase the colonial style and architecture to attract foreigners as well as domestic tourists,” he says. Shakya also says the tourism stakeholders including the government should come up with cottage industry packages where handmade merchandise products are made in the capital valley and other parts of the country.
Meanwhile, the seasonality factor has also been a contributor to the lower number of tourists arrivals. Generally, the arrival of foreign visitors in the periods of September-November and March-May is high in Nepal with the former being considered as the main tourist season. Experts advise that people engaged in the tourism business should change this mindset as it stops foreigners visiting Nepal in certain months. “We ourselves have created the impression that tourists cannot visit certain places in the country in particular seasons,” mentions NTB CEO Joshi. “We need to have some specific programmes to change this mindset among the foreigners.” He informs that NTB has been making an effort to make tourism activities run all year round. The board in recent years has been promoting Nepali tourism by offering attractive packages to visitors in the ‘off seasons’. “We have been promoting themes like the ‘Romantic Monsoon Weekends’ and ‘Monsoon Madness’ to attract tourists especially from the Indian market,” he informs.
Campaigns and Promotion to lease a new life in tourism sector
2015 has been the worst year for Nepali tourism in living memory. The unfortunate events of the earthquake, Terai stir and border blockade that followed resulted in a massive slump in tourist arrivals in the country. The number of arrivals fell to a six-year low. With the end of the Indian blockade in early mid-February of 2016, things slowly began to come back to normalcy. Entrepreneurs say that though the rate of arrival of tourists increased by over 40 percent in 2016, the scenario is still not that promising. “Even during the peak season, our occupancy rate was not more than 65 percent, which should have been 100 percent,” informs HAN President Shakya. “We had only 45 to 50 percent occupancy rate this December,” he adds. According to him, the recovery has been slow due reasons such as the unstable politics and the government’s inability to give attention to the development of the sector.
Among the official tourism campaigns conducted over the years, only Visit Nepal Year 98 has been successful in achieving the target. The Nepal Tourism Year (NTY) 2011 is not considered an all out successful due to the political instability affecting the running of the programme. Nevertheless, NTB has been organising campaigns in properly planned manners. Currently, the 'Ghumfir Barsha 2073'(Travel Year 2016-17) is ongoing which aims to promote domestic tourism in the country. Karna Sakya suggests creating slogans with compelling messages. “We need to brand it in such a way that it should convey the message that Nepal is among the world’s most hospitable countries,” he says. “It is not known to many in the world that there are rhinos in Nepal. People across the world generally think that the large body mammals are only found in Africa. We need to brand our country as a combination of Africa and the Alps.”
In the meantime, proper infrastructures must be developed and maintained to attract more visitors to the country. “It is the infrastructures we lack so as to receive high number of tourists,” says Joshi, adding, “Our only one international airport is in a dire need of upgradation and improvement in management.” It is an irony that Nepal’s only airport does not runs for 24 hours and only has around nine aircraft-parking bays clearly barring the country to receive high number of tourists via the air route. Joshi stresses that new international airports such as those under construction at Bhairahawa and Pokhara are needed to improve the air connectivity. “Similarly, proper road infrastructure is also required to receive tourists in high numbers via the land routes.”