Peak Season in Peril

Nepal’s tourism industry, long a cornerstone of the nation’s economy, has been thrown into chaos following the unprecedented Gen Z-led protests on September 8 and 9, 2025. Traditionally, the period from September through November represents Nepal’s peak tourist season, when the post-monsoon landscapes, clear skies, and cultural festivities attract visitors in droves. Airlines, hotels, trekking agencies, and other tourism-related businesses gear up months in advance for this surge, relying on both domestic and international travelers. This year, however, the usual rhythm of bustling airports, packed hotels, and crowded trekking trails has been violently disrupted.

The protests’ timing could not have been worse. The unrest came just as Nepal’s tourism sector was recovering from previous downturns and building on strong momentum. In 2024, Nepal welcomed 1.14 million international tourists, a 13 percent increase from 2023, though still shy of the pre-pandemic peak of 1.2 million. The first eight months of 2025 had already brought 736,562 arrivals, signaling a robust potential rebound. Yet, the sudden wave of demonstrations has not only reversed these gains but threatens the stability of the entire tourism ecosystem.

Hotels Gutted and Jobs Lost

The Hilton Kathmandu, a symbol of Nepal’s growing hospitality sector, was among the hardest hit. Intended to welcome guests with the usual fanfare on September 9, the hotel instead became a site of smoke, vandalism, and panic. Losses at the Hilton alone are estimated at over Rs 8 billion. Other prominent properties, including the Hyatt Regency and Varnabas, along with nearly 25 additional hotels across Kathmandu, Pokhara, Butwal, Bhairahawa, Jhapa, Morang, Dhangadhi, Mahottari, and Dang, were similarly damaged.

Binayak Shah, President of the Hotel Association Nepal (HAN), explains that the financial impact is severe. Total industry losses are estimated at Rs 25 billion, with over 2,000 direct jobs affected. Many hotel owners are reluctant to speak publicly, fearing scrutiny and further damage to Nepal’s already fragile image. Marriott Kathmandu, for instance, reported occupancy levels of just 35–40 percent, down from the usual 80–90 percent.

The ripple effects extend beyond hotels. Airlines, restaurants, travel agencies, trekking guides, and souvenir shops—industries heavily reliant on tourist spending—are bracing for substantial losses. According to the Nepal Rastra Bank, the hotel sector carries Rs 200 billion in bank loans, roughly 3.7 percent of total banking sector lending. With revenues collapsing, questions loom over debt repayment, potential defaults, and systemic risks to the financial sector.

Even tourism-adjacent infrastructure has suffered. Chandragiri Hills, a popular cable car and resort destination, sustained damage to its lower station, forcing prolonged suspension during peak season. Across Kathmandu Valley, Lumbini, Chitwan, and Pokhara, visitors canceled trips or stayed indoors, further reducing revenue for local businesses.

Pokhara and Chitwan Feel the Heat

In Chitwan, one of Nepal’s most popular tourist districts, key hubs including Sauraha, Patihani, Meghauli, Amaltari, and Pithauli had been meticulously preparing for their annual influx of visitors. Hotels and resorts had geared up for corporate groups, domestic travelers, and international tourists, while local operators stocked supplies and coordinated staff schedules. While the district’s physical infrastructure largely escaped damage, local tourism entrepreneurs report that the season has effectively collapsed. Corporate bookings through November have vanished, tourists have stopped coming, and even advance reservations are being cancelled.

In Pokhara, the situation has been far more severe. Protests left six hotels, resorts, and restaurants in ashes, devastating the Annapurna region’s crucial trekking season, which usually peaks in September and October. Foreign trekkers, many of whom had made bookings months in advance, are withdrawing at alarming rates. The Gandaki Chapter of the Trekking Agencies’ Association of Nepal (TAAN) reported that nearly 40 percent of scheduled trekking trips have been cancelled. Hotel occupancy rates in the area have dropped sharply, with the Hotel Association Pokhara estimating a 20–25 percent reduction in reservations.

The disruption extends beyond local hotspots. Flights from Pokhara to Jomsom, a key gateway to Mustang, have been suspended due to mass cancellations, while Ramechhap Airport—normally teeming with 20–22 daily flights to Lukla for Everest treks—now lies silent. Trekking operators note that Jomsom has been hit even harder than Lukla, with safety concerns driving tourists away. Annually, around 300,000 tourists visit Nepal for Himalayan and hill-region treks, with nearly 70,000 embarking during October (Asoj–Kartik) and April (Chait–Baisakh). The protests struck precisely at the peak season, causing widespread disruption.

Tourist Arrivals Collapse

Data from the Nepal Tourism Board (NTB) illustrates the scale of the crisis. Average daily arrivals fell from 3,181 before the protests to just 1,365 after September 8. In the first half of September, only 33,638 tourists visited Nepal, compared to 96,305 in the same period last year. More than 70 percent of Indian tourists canceled bookings, hitting a key demographic for religious, cultural, and trekking tourism.

The psychological impact is just as significant as the financial one. Upaul Majumdar, Head of Practice – Tourism for South Asia at Dolma Consulting UK, notes, “The images of burning hotels and the absence of security forces went viral, creating a damaging perception of Nepal as unsafe for visitors. Cancellations poured in almost immediately, and many countries still maintain travel advisories for their citizens.”

Even though no tourists were harmed physically during the protests, perception often outweighs reality in the tourism industry. “Right now, the perception is deeply damaging,” Shah added.

Fragile Tourism Sector Under Stress

Tourism has long been a resilient sector in Nepal, rebounding after crises like the 2015 earthquakes and the COVID-19 pandemic. Yet, despite iconic landscapes, temples, and cultural richness, Nepal’s tourism has historically underperformed. Accommodation and food services contribute modestly to GDP, while average tourist spending—about $40 per day—is low compared to competing destinations. Inconsistent service quality, limited air connectivity, and weak branding have long constrained Nepal’s ability to capture high-value travelers.

The Gen Z protests add another layer of fragility. Khem Raj Lekai, President of the PATA Nepal Chapter, said, “The timing couldn’t have been worse. At a time when Nepal should be welcoming the world, we are turning them away.”

Coordinated Action Needed

Industry leaders and government agencies are scrambling to contain the damage. HAN has called for a judicial committee to investigate the protests, provide compensation, and ensure accountability. Experts warn that without visible justice, investor confidence may falter. Simultaneously, the umbrella body of hotels across the country has urged the government to introduce financial relief packages for reconstruction. “Hotels alone cannot shoulder the repair costs. Without urgent support, jobs, loans, and livelihoods will collapse,” Shah emphasized.

The NTB, operating on a modest Rs 1 billion annual budget, has assumed a critical role in crisis management. The board extended visas for stranded tourists, offered free shuttle services, and coordinated messaging across media platforms to manage perception. An NTB official noted, “These may seem like small steps, but they send a clear message that Nepal is determined to safeguard its image as a welcoming destination.”

Rebuilding Nepal’s Image Abroad

Global media coverage of burning hotels and street unrest has cast a long shadow over Nepal’s tourism sector. Countries including India and China remain cautious, while Western governments continue to advise travelers to reconsider plans to visit Nepal. Rebuilding Nepal’s image is vital—not only to attract future tourists but also to protect the livelihoods of thousands dependent on the sector.

Industry leaders argue that the current crisis can be transformed into an opportunity. Lekai stated, “Despite the tragedy, Nepal has once again captured the world’s attention. With the right strategy, we can use this moment to rebuild stronger.”

Experts point to lessons from previous crises. After the 2015 earthquakes, international sympathy and aid facilitated a surge in visitor numbers. Similarly, during the COVID-19 pandemic, recovery followed coordinated promotion and policy support. This time, Nepal largely stands alone. “The world rallied around us during the earthquake and the pandemic. But today, Nepal must rebuild from within,” Lekai explained.

Visible government action is essential for recovery. Holding vandals accountable and ensuring the safety of remaining and future tourists is critical. Binayak Shah stressed, “Tourism is not just about numbers—it is about trust. If we can show the world that Nepal is safe, welcoming, and forward-looking, we will recover stronger than before.”

Economic and Social Fallout

With hotel occupancy plummeting, trekking trips canceled, and international arrivals down, the livelihoods of thousands of workers—including hotel staff, guides, transport operators, and ancillary service providers—are at risk. Supply chains for hotels, restaurants, and local businesses have been disrupted.

Socially, communities dependent on tourism are experiencing heightened anxiety. Many regions in Chitwan, Pokhara, and the Himalayan belt rely on seasonal tourist income for basic livelihoods. With cancellations piling up, families and local economies face uncertainty. In Pokhara alone, hundreds of jobs have been temporarily lost, with long-term consequences for youth employment in tourism-dependent districts.

Recovery and Reform

Industry leaders advocate for a multi-pronged approach to recovery. Immediate measures include enhancing security at tourist hubs, increasing coordination with airlines, promoting Nepal in international media, and engaging foreign embassies for tourism support. Transparent communication with global partners, ensuring tourists feel safe, and guaranteeing compensation for those affected by cancellations are critical.

Long-term, the crisis presents an opportunity for a radical reset. Shah suggested, “Tourism needs a complete rethink. We need young leadership, fresh ideas, and bold reforms. This could be the moment to transform the sector.” Majumdar agreed, adding that coordinated promotion, crisis communication, and policy reforms could turn this setback into a catalyst for lasting change. Despite the grim outlook, optimism remains. Three days after the protests, much of Nepal had returned to normalcy, demonstrating remarkable resilience. Lekai noted, “The crisis hit like a flash flood—sudden, devastating, and overwhelming. But the recovery started just as quickly. That kind of resilience is rare.”

Tourism in Nepal is complex, with domestic travel and social events accounting for nearly 60 percent of total revenue. Yet international arrivals, which bring higher spending, are far more sensitive to Nepal’s image abroad. Restoring confidence among foreign travelers is thus crucial for both short-term revenue and long-term growth. Hotels are offering discounts, trekking agencies are reassuring clients, and NTB is expediting international promotional campaigns. The sector is mobilizing to salvage whatever remains of the current season while preparing for a challenging outlook in 2025.

Nepal’s tourism sector, which has weathered earthquakes and pandemics in the past, now faces one of its most acute crises in recent history. The Gen Z protests have not only caused physical damage to hotels and infrastructure but also severely undermined international confidence, disrupted peak-season income, and threatened livelihoods across the country.

Recovery will require immediate financial support, robust security measures, accountability for perpetrators, and a coordinated strategy to rebuild Nepal’s image abroad. In the long term, the sector must embrace reform, innovation, and leadership capable of navigating modern challenges while leveraging Nepal’s natural and cultural assets. If managed strategically, this crisis could serve as a catalyst for transformation, enabling Nepal to emerge stronger, more resilient, and better equipped to welcome the world in the future.

Nepal’s tourism industry is resilient, but perception matters as much as reality. The world is watching. How the country responds will define the sector’s trajectory for years to come?

This report was originally published in October 2025 issue of New Business Age magazine.