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May 2017 Sectoral

Published on: 2017-05-19 16:00:40     1258 times read    0  Comments
Investment Pouring Into Hotel Industry

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.

With the private sector getting increasingly attracted to the hospitality sector, dozens of big and small hotels are being built in Kathmandu and other major cities of the country. Private sector investment in the hospitality sector has been on the rise as the government has accorded high priority to infrastructure projects to woo foreign tourists and investors. Over a dozen star-rated hotels, including half a dozen of five-star standard, are in the pipeline, targeting high-end tourists. The existing hotels, too, are expanding to accommodate more tourists.

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 has already been invested in the hotel business so far. Various globally renowned hotel chains are entering or re-entering the country partnering with large local business houses and the Nepali Diaspora to invest in different hotel projects. 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. 

The iconic Indian hotel chain Taj Hotels Resorts and Palaces, for example, re-entered Nepal in April 2016 partnering with CG Hotels and Resorts to operate the Meghauli Serai Jungle Lodge located at Chitwan. Till the mid-2000s, Taj used to manage the Annapurna Hotel. Meanwhile, CG Holdings run by Managing Director of Chaudhary Group, Arun Chaudhary signed a management contract with the British multinational hotels company InterContiental Hotels Group (IHG) in April 2016 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 8 billion in the hotel project. 

Nepal Hospitality Group (NGH), a part of the MS Group, has opened a 108-room three-star property Fairfield by Marriott Kathmandu, managed by the US Hotel chain Marriott. The hotel came into operation about a month and a half ago. 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. 

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 complete is slated for a soft launch within the next few months. 

Likewise, the Summit Group has signed a Memorandum of Understanding (MoU) with The Leela Palaces, Hotels and Resorts of India to collaborate on the first of four hotels to be established across the country. The Leela Kathmandu, a five-start deluxe hotel to be built in the heart of the Capital, is the first of the series of hotel to be built by the group. 

According to the MoU, Summit Group which has extensive interests in real estate, hotels and allied businesses will develop the property, while The Leela will market and manage it. Located near the Narayanhity Royal Palace Museum, The Leela Kathmandu will be the first of a series of hotels to be established across Nepal. It will be followed by a hotel in Lumbini, birthplace of Buddha, as part of The Leela Group’s plans to pave a Buddhist Trail from Nepal to Bodhgaya, Nalanda, and Varanasi in India. Other places in Nepal where hotels are being planned under the Leela banner include Pokhara.

Similarly, industrialist Suraj Vaidya is planning to build a five-star hotel in Tinkune. He has also unveiled plans to build resorts in Begnas Lake area of Kaski and in Lumbini. Likewise, the Shangri-La Group, which operates Hotel Shangri-La Kathmandu and Shangri-La Village Resort Pokhara, has unveiled plans to build a deluxe resort near Begnas Lake in Kaski.

Nepal currently has around 5,000 hotels. Among them, 730 are star-rated. As the number of star hotels has remained more or less the same over the past decade, investors are putting their money to fulfill infrastructure gap in this segment.

According to officials at the Ministry of Tourism and Civil Aviation, around two-dozen star-rated hotels are under different phases of construction. Hotel Nilgiri, Hotel Galaxy, Rara Hotel and Recreation Center, Star Hospitality, Himalayan Shangri-La Village Resort, Hotel Samna, RM Group Hotel, Everest Hospitality, Rupakot Resort, Himal Water Park and Village, Nepal Hospitality Group, Hotel View Bhrikuti, Sriji Hotels, Soaltee Sikkim, Thamel Plaza, Hotel Mountain Monastery, Centurion Hotel, Chamero Plaza and Hotel Garima are under construction.

More Hotels Coming Up in Pokhara
Pokhara is also receiving huge investment in the hospitality sector. Entrepreneurs are not only building new hotels but also adding rooms in the existing hotels to accommodate more visitors

Glacier Hotel in Lakeside is investing Rs 200 million to add 31 rooms. Once the construction is completed, the hotel will have 45 rooms. Similarly, Temple Tree Resort is also adding 20 rooms with an investment of Rs 150 million. Basu Tripathi, a former board member of Nepal Tourism Board, is building Hotel Adam with an investment of Rs 30 million.

The Shangri-La Group is opening a new resort at Begnas, Pokhara, under a new name — The Lost Horizon Resort — with an investment of Rs 500 million.

New Hotels in and Around Sauraha
Entrepreneurs in Sauraha are eyeing new places in the vicinity of the Chitwan National Park to open new hotels, lodges and resorts. Investors are opening resorts in Patihani, Jagatpur and Meghauli, along with Sauraha.

Seven Star Hotel, Green Park, Tiger Land, Machan, Landmark, Barahi Jungle Lodge are the new hotels that recently came into operation in Chitwan. Likewise, Zinc Journey Chitwan, which is promoted by Nepal’s leading business conglomerate — Chaudhary Group — is currently under construction.

New Investment in Butwal
The hospitality industry in Butwal and surrounding areas has drawn investment of around Rs 1.5 billion in recent years. Hotel Denovo alone has invested more than Rs 500 million. The 40-room hotel, which has facilities like swimming pool, fitness club and restaurants, is the biggest hotel in Butwal so far. It has 35 standard rooms, four deluxe rooms and one executive deluxe room.

Local businessman Bhim Lal Neupane is investing Rs 100 million to open a hotel in Gol Park area in Butwal-5. Existing hotels are also making new investment to expand their capacity. New Era Hotel, which has 25 rooms at present, is adding 22 rooms. Similarly, a new resort is coming up in Dobhan VDC-7 of Palpa at an investment of Rs 300 million. The proposed site for Hillside Village Resort lies just 15 kilometers northwest of Butwal. Likewise, entrepreneur Nirmal Shrestha has invested Rs 70 million to open Hotel Lotus. The hotel has 40 rooms.

Entrepreneurs of Butwal and surrounding areas are putting more money into the hospitality sector as they are encouraged by the ongoing upgradation of Bhairahawa airport into a regional-level international airport.

Meanwhile, six new hotels are coming into operation in Lumbini. Construction of a new five-star hotel in Lumbini has also begun. The 120-room hotel is being built by the Pawan Group. The hotel is expected to start operation after a year.

Amar Man Shrestha, president of the Hotel Association Nepal (HAN), says it is a positive development that new investments in the hospitality sector are coming from the established business houses of the country. “They are making investment after thoroughly studying the market which means they have seen the room for growth,” says Shrestha, "International hotel chains are coming to Nepal as they might have anticipated political stability. If the country becomes politically stable, our tourism industry will see unprecedented growth." 

Former president of HAN and a seasoned hotelier, Yogendra Shakya, too thinks the new investment in the country's hospitality industry is always positive. “Investors are no fool, they make investments only after thoroughly studying the market,” Shakya said, “In 2003-04 many four start hotels were closed. Tourist arrivals started increasing after 2009. New investors might have seen the room for growth.”


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