Hotel businesses in Lumbini Province are struggling, with overall occupancy rates remaining below 40% despite some growth, according to Nepal Rastra Bank (NRB).
The Lumbini Province Economic Activity Study 2023/24 , published by NRB, revealed that the hotel occupancy rate increased by 13.87% in the fiscal year 2023/24, reaching 38.53%, compared to 33.86% in 2022/23. However, the rate remains below 40%, indicating persistent challenges in the hospitality sector.
The findings are based on a survey of 15 tourist-level hotels across the province: nine in Rupandehi, three in Banke, and one each in Palpa, Arghakhanchi, and Kapilvastu districts.
The construction of Gautam Buddha International Airport has led to an increase in the number of hotels and restaurants in Rupandehi and surrounding areas, with some still under development. However, the airport is struggling to operate in full capacity. As a result, the investment made in the hotel industry is at risk. The survey analyzed key tourism indicators, including the number of beds, room sales, employment, and tourist arrivals in these hotels.
The report highlighted a decline in Indian tourist numbers, which dropped by 5.39% to 132,143 in the review year compared to the previous year. This reduction negatively impacted hotel occupancy despite an increase in domestic tourism.
On a positive note, the number of hotel beds grew by 8.07%, reaching 1,272, while room and bed sales rose significantly by 22.97%, totaling 178,900 in the fiscal year 2023/24. Employment in the surveyed hotels also increased, with 961 people employed, including 722 men and 239 women.
While domestic tourism has contributed to improved occupancy rates and employment, the overall decline in foreign tourist arrivals, particularly from India, remains a significant challenge for the region's hospitality industry.
