Nepal’s Hospitality Moment

The pace and scale of these announcements uggest that Nepal’s hospitality sector has ntered a new phase. Global hotel brands are o longer cautiously testing the market; they itting across segments and destinations. Premium and luxury hotels as well as wellness  resorts are entering the market. At the same time, established international chains are expanding their footprints. Together, these moves signal growing confi-dence in the country’s long-term tourism fundamentals. For international operators and domestic investors, Nepal is no longer a fringe or experimental market. It is increasingly viewed as a destination that justifies long-term capital and commitment.

But optimism alone does not define this moment. Beneath the surge lies a more complex reality. Rapid expansion in room supply has intensified competition. Room rates are under pressure even as international tourist arrivals recover. Political unrest has shaken traveller confidence at critical moments. Infrastructure constraints remain unresolved, while cost overruns and project delays continue to strain developers. The main question facing Nepal’s hospitality industry is no longer whether global brands will come. It is whether the market can sustain them.

This shift is visible in where brands  are choosing to invest and how they are positioning themselves. Beyond  individual announcements, a clear pattern of diversification is emerging across geography, brand positioning, and investment horizons.

In December, Moxy Hotels, part of Marriott’s global portfolio, officially entered Nepal with the opening of Moxy Kathmandu. The property introduced a lifestyle-oriented product aimed at younger, experience-driven travellers. Building on that entry, MS Group, one of Nepal’s most prominent hotel investors, has announced plans to open a JW Marriott in Bhaktapur, extending branded luxury beyond the capital’s traditional hotel districts.

Brand diversification, however, is only one part of the story. The more consequential shift is geographic. After two hotels in Kathmandu, Hyatt  Hotels has opened its third property in Nepal, Hyatt Place Butwal, in Butwal—a major commercial hub in western Nepal. Sarovar Hotels has introduced its premium Tulip brand through Royal Tulip Chitwan in Sauraha, one of central Nepal’s most prominent tourist destinations.

Among international operators, IHG Hotels & Resorts illustrates the scale of this expan-sion most clearly. The group has signed a management agreement with Club Chaulani Ltd to develop Holiday Inn Dhangadhi—a 115-key hotel in Dhangadhi. Scheduled to open in the first quarter of 2028, the project marks the group’s entry into Sudurpashchim Province. The Dhangadhi signing was one of three management agreements IHG concluded in Nepal in 2025. The others include Holiday Inn Express & Suites Dhulabari in south-eastern Nepal, developed with Hotel Eastern Nepal Pvt Ltd, and Crowne  Plaza Lumbini with Lumbini Heritage Limited. Taken together, these developments point to more than isolated investments. They reflect a structural shift in Nepal’s hospitality ecosystem defined by wider geographic reach, deeper brand diversification, and longer investment horizons.

What distinguishes the current wave is not merely the arrival of new names. It is the breadth of offerings that the market is now attempting to absorb. Youth-oriented life-style concepts are sitting alongside  heritage-led luxury, while business hotels are emerging in secondary cities. Wellness  resorts are taking shape on the fringes of urban centers. For the first time, Nepal appears capable, at least in ambition, of supporting multiple ho-tel typologies at scale.

Branded Hotels Take Root

To understand why this wave matters—and why it differs from earlier cycles—it is important to recognize how recently Nepal’s branded hospitality ecosystem began to take shape. Until the mid-2010s, international hotel brands  were rare in the country. Their presence was overwhelmingly concentrated in Kathmandu.

Early examples, such as The Soaltee Hotel’s association with India’s Oberoi Group, The Everest Sheraton, Hyatt  Regency Kathmandu, Hotel de l’Annapurna under the management of Taj, and Radisson Hotel Kathmandu, were exceptions rather than evidence of a broader system. Outside the capital, internationally branded hotels were  virtually absent. Most properties were  independently owned and operated, typically serving niche markets or seasonal demand.

That pattern began to change after 2015. The year marked a turning point not only because of political restructuring, but also because investor perceptions started to shift. Confidence grew that Nepal could support professionally managed, internationally standardized hotels.

The Marriott Effect

This shift crystallized in 2017 with the entry of Marriott International through its mid-scale brand Fairfield by Marriot. Developed by MS Group with an investment exceeding Rs 1 billion, the property marked the arrival of a new global hotel brand in nearly a decade.

It also sent a clear signal that Nepal had reached a level of market stability and scale capable of attracting international operators. More importantly, Fairfield demonstrated that hotels designed for efficiency rather than grandeur could succeed commercially in Kathmandu.

“The entry of Marriott into Nepal acted as a turning point for branded hospitality,” said Upaul Majumdar, Head of Practice–Tourism for South Asia at Dolma Consulting UK.

Unlike traditional five-star hotels that depended heavily on banquets, diplomatic  traffic, and large conferences, the new generation of branded properties prioritized predictable service standards, lean operations, and consistent performance metrics. Their ability to generate steady revenues without extensive luxury infrastructure challenged long-held assumptions about what kinds of hotels could work in Nepal.

“The opening of Fairfield by Marriott and Aloft Kathmandu, both franchise models, helped investors grow in confidence,” Majumdar said. “After that, a flurry of hotels began entering Nepal from 2019 onwards.” That momentum continued as another brand under the same global group launched a boutique property in Thamel, reinforcing the viability of franchise and management-contract models in the local market. Just as branded hospitality was gaining momentum, the Covid-19 pandemic abruptly reversed the trajectory.

Sashikanta Agrawal, Chairperson of Marriott Kathmandu Hotel, says Nepal’s tourism potential remains underexposed despite its natural advantages. “Nepal has adventure tourism, mountains, rafting, and much more, but we have not been able to capitalize on or showcase them properly,” he said. “Still, I believe Nepal will take a leap forward—that is why I entered the tourism sector. I started small with Fairfield in Thamel.”

However, the 115-room Fairfield in Thamel continues to underperform global benchmarks. While Fairfield hotels worldwide average occupancy rates of around 90%, the Nepal property operates at roughly 65%. “This reflects structural constraints within the tourism sector,” Agrawal said.

If 2019 marked momentum, 2020 tested survival. Tourism collapsed during the pandemic as borders closed and hotels across the country suffered unprecedented losses. But the pandemic did more than disrupt travel; it quietly reconfigured it. “The pandemic temporarily disrupted tourism, but it also changed travel patterns in ways that benefited Nepal’s hotel sector,” said Majumdar.

As remote work became normalized and work-leisure travel gained wider acceptance, travelers began seeking quieter destinations where productivity could be combined with nature and respite. Demand gradually shifted away from dense urban centers toward peri-urban locations, heritage towns, and nature-oriented destinations. This opened new opportunities for branded hotels beyond Kathmandu.

Between 2022 and 2024, this shift translated into a surge of new brand signings and openings. International operators across multiple segments, ranging from select-service business hotels to lifestyle and resort brands, entered the market. Established global players expanded their footprints, while new entrants targeted both the capital and emerging destinations. The pace of activity reflected growing confidence not only in in-bound tourism, but also in domestic travel, which rebounded strongly after the pandemic.

Domestic factors reinforced this momentum. The 2015 constitution formalized provincial capitals and accelerated urbanization in secondary cities. This created demand for busi-ness and government travel. Improved road connectivity made regional centers more  ac-cessible, while rising middle-class incomes fuelled weekend and family travel.

As a result, cities such as Bhairahawa, Butwal, Pokhara, Biratnagar, Simara, Dhangadhi, Mahendranagar, and Lumbini began attracting branded hotels, including internationally managed five-star properties.

From Kathmandu to the Provinces

Industry stakeholders estimate that nearly Rs 200 billion has already been committed to the hospitality sector, spanning completed hotels, projects under construction, and announced developments. While estimates vary by source, there is little dispute over the magnitude of capital involved. Multiple international hotel groups manage a growing portfolio of branded properties across Kathmandu and key destinations beyond the capital—a footprint that has expanded rapidly over the past decade and is set to widen fur-ther as projects in the pipeline come on stream.

Although Nepal’s engagement with global hotel brands dates back to the 1960s, international chains appeared sporadically, particularly during the 1990s, when  several global operators established a presence in Kathmandu. These hotels helped position Nepal as a viable destination for diplomats, high-end leisure travellers, and international confer-ences. But since their numbers were limited, branded hospitality never evolved into a broad-based ecosystem.

However, the boom that started in the mid-2010s is not showing signs of stopping. What distinguishes this phase is its scale and diversity. “The growing number of branded hotels itself reflects confidence in future arrivals,” Majumdar said. “Today, almost every major international chain has a presence in Kathmandu, and the focus is rapidly shifting outside the capital. Cities such as Bhairahawa, Pokhara, Biratnagar, and emerging provincial hubs are attracting branded five-star properties with 100 or more rooms.”

Domestic conglomerates have played a critical role in this expansion. Established business houses with diversified  portfolios have increasingly partnered with international operators. They are leveraging brand affiliations to enhance project bankability and market positioning. These partnerships reflect a strategic shift among Nepali investors, who now view brand alignment as essential rather than optional.

When Growth Turns Competitive

The rapid expansion of room inventory has outpaced growth in high-value demand. This has triggered aggressive discounting across destinations. While tourist arrivals have re-covered steadily since the pandemic, average visitor spending has declined—from about $55 per day to roughly $45. Hoteliers see this drop as evidence of a growing price war. The pressure is more acute for mid-scale and luxury hotels burdened by high fixed costs.

This growing imbalance between supply and demand has raised concerns about the mar-ket’s long-term sustainability. Industry people warn that unchecked expansion could erode returns and weaken the financial health of operators, especially those carrying significant debt. Although branded hotels benefit from standardized systems, strong distribution networks, and global marketing reach, they are not immune to prolonged price competition. In some destinations, room rates have fallen to levels that barely cover op-erating costs, forcing hotels to rely increasingly on ancillary revenues such as food and beverage, events, and bundled packages. These structural pressures were further compounded by an unexpected external shock.

Political Shock to Recovery

In September 2025, political unrest erupted just as Nepal’s lucrative autumn tourism sea-son was getting underway. Protests that turned violent damaged hotels, restaurants, and tourism-related businesses in major hubs such as Kathmandu and Pokhara. Several hotels were vandalized or set ablaze, forcing temporary closures and triggering a wave of cancel-lations at what is typically the sector’s most profitable time of year.

“During peak season, hotels in Nepal were recording occupancies of around 80%. However, overall cancellations during the period stood at 45-50%,” said Rabin Manandhar, General Manager of Hotel Shambala, Kathmandu. “In our case, confirmed booking cancellations were limited to around 20%, but the impact on forward bookings and overall sentiment was significant.” he added.

High-profile luxury hotels were among those affected. The recently opened Hilton Kathmandu sustained heavy damage and was forced to close while authorities assessed safety conditions. Hyatt Regency Kathmandu also suffered damage and has remained shut pending repairs. In Pokhara’s Lakeside area—one of the country’s busiest tourist zones—hoteliers reported extensive damage to multiple establishments.

Tourist arrivals in September fell by 18% compared to the same period a year earlier, wiping out weeks of anticipated revenue. Even where confirmed cancellations were lower, the broader hit to confidence and forward bookings was profound.

Although relative calm has since returned, industry people warn that the reputational damage may take time to reverse. Travel advisories issued by several foreign govern-ments during the unrest further undermined confidence, and hoteliers fear lingering perceptions of instability could weigh on future seasons. Restoring traveler trust, repairing damaged properties, and easing financial stress have become urgent priorities. Hoteliers have called on the government to provide relief measures, strengthen security assurances, and step up international promotion.

The near-term outlook remains uncertain. “Expectations are subdued, particularly  for the key spring season of March–April,” Manandhar said. “The situation is further complicated by the national election scheduled for March, with some foreign embassies already issuing travel advisories. Hoteliers fear this will directly affect tourism flows.”

Still, some in the industry remain cautiously optimistic. Abhishek Paricha, General Manager of Mercure Kathmandu, argues that Nepal’s core tourism appeal remains intact. “Nepal already has its own positioning. What we need is visibility—especially through so-cial media and marketing,” he said. “Destinations like Chitwan, Kathmandu, Pokhara, and Lumbini offer many reasons to travel.”

Paricha believes the expansion of branded hotels will help rebuild confidence and drive growth through customer loyalty. “All branded hotels bring loyal customers,” he said. “At Mercure Kathmandu, 45% guests over the past four months were new customers, while loyalty members accounted for about 15% of occupancy.”

He underlined the need to present and promote what Nepal already has. “We have forest reserves, hills, religious sites, nightlife, wildlife tourism, and wellness offerings such as sound healing, which is drawing visitors on its own. We don’t need to reinvent Nepal—we just need to promote what the country already has,” Paricha said.

Inside Costly Delays

Even before political shocks, execution risks were quietly eroding returns. Delays and cost overruns have become a recurring feature of Nepal’s hotel development landscape, driven largely by gaps in planning, coordination, and financing.

“In many cases, construction begins before all consultants have finalized their inputs,” said Majumdar. “When consultants work in silos and their designs are not synchronized, conflicts emerge on site. This leads to rework and delays. If these issues are not managed properly from the outset, they become a major source of inefficiency.”

Industry people point to several structural problems. One is inadequate time allocated for design development. Hotel projects typically require months to finalize architectural, structural, and technical drawings. But many developers rush to break ground before designs are complete. This results in frequent design changes during construction which dis-rupts workflows, increases material wastage, and inflates costs.

Another persistent issue is weak coordination among multiple consultants. Hotel developments involve a wide range of specialists, including architects, structural and electrical engineers, fire-safety experts, and mechanical consultants. When construction starts before all inputs are finalized and aligned, design conflicts surface on site, triggering rework and delays. These challenges are often compounded by shifts in project vision mid-construction, as developers revise plans after visiting other properties or reacting to changing market trends, setting off cascading adjustments across building systems.

The most critical challenge, however, is commencing projects without secured financing. Some developers begin construction on the assumption that funding will be arranged later. When cash flows do not materialize on schedule, contractors face payment delays and slow work, leading to extension of project timelines and driving up financing costs. Over time, these execution risks undermine returns and strain relationships between owners, contractors, and operators. Despite these challenges, global hotel brands continue to view Nepal as a market with strong long-term potential.

Why Global Brands Remain Bullish

Despite short-term volatility, global hotel brands continue to see opportunity in Nepal, driven by the structure of arrivals, the nature of demand, and the country’s long-term tourism fundamentals. Industry people argue that headline arrival numbers alone fail to capture the resilience embedded in Nepal’s tourism mix. A significant share of visitors arrive by road from India, alongside non-resident Nepalis who are counted in tourist statistics. For international operators, this steady flow of regional and diaspora travel provides a buffer against fluctuations in long-haul markets and geopolitical shocks.

Nepal also compares favorably with many tier-two cities in neighboring countries where branded hotels are already well established. Unlike purely urban or business-led destinations, Nepal’s appeal is overwhelmingly nature-based. Mountains, forests, clean air, and deep cultural heritage define the visitor experience, setting the country apart from regional competitors. This uniqueness has strengthened Nepal’s positioning as a destination market rather than a short-stay or transit stop

Infrastructure constraints, however, remain a major bottleneck. “Much of the air traffic is dominated by flights from the Gulf and Malaysia, largely serving migrant workers rather than leisure tourists,” said Suman Shrestha, General Manager of The Terraces and Spa.

Although Nepal now has additional international airports outside Kathmandu, they remain underutilized. Weak road connectivity further limits growth, particularly for tourists entering by land.

Ramesh Hamal, Managing Director of Omstone Asia Capital Nepal Pvt Ltd, which operates two Dusit Thani properties in the country, says the surge in hotel development reflects both aspiration  and untapped potential. “Once hotels tie up with international brands, standards of governance, accountability, and human resource management improve significantly,” he said.

According to Hamal, Nepal is operating far below its tourism potential. “We are not reaching even 10% of what the country can ultimately achieve. If facilities at Tribhuvan International Airport are improved, road connectivity strengthened, and basic infrastruc-ture upgraded, the outlook would change dramatically. Airport taxes are also very high and need serious rethinking,” he added.

Tribhuvan International Airport is one of the most serious structural constraints for the tourism industry, according to industry people. Despite operating around the clock, its capacity is limited, and the arrival experience is widely cited as a deterrent.

“Entry into the country must be made easier,” Hamal said. “The first point of contact is chaotic and undignified. Tourists are asked to remove jackets, belts, and shoes, creating unnecessary stress and a poor first impression.”

Poor road infrastructure compounds the problem. Hamal pointed to his own project in Dhulikhel, just 38 kilometers from Kathmandu, where delayed road expansion has undermined access despite the destination’s clean air, views, and favorable climate.

At the same time, the purpose of travel to Nepal is evolving. Leisure tourism is spreading beyond Kathmandu into secondary cities and periurban areas. Destination weddings, meanwhile, have emerged  as a powerful growth driver. Indian travelers, in particular,  are increasingly choosing Nepal for weddings because of proximity, ease of travel, and scenic settings. This trend has strengthened demand for internationally branded hotels capable of delivering predictable service standards for large events. Such properties offer clearer  visibility on room nights, banquets, and ancillary revenues.

“Destination weddings and MICE tourism are gaining momentum as Nepal is positioning itself as a cooler, more diverse  alternative to traditional regional venues,” Shrestha said.

From a financing perspective, rising arrivals combined with brand affiliations have improved project bankability. Banks now view branded hotels as lower-risk investments, citing global performance benchmarks, operating discipline, and brand accountability. This perception  has encouraged capital from established business groups and prompted owners to upgrade independent properties through international affiliations.

In Kathmandu, the market is steadily shifting from non-branded hotels toward branded properties, and from mid-scale to luxury offerings. Alongside this transition is a gradual diversification of tourism products—one of the reasons global brands remain convinced that Nepal’s hospitality story, despite its challenges, is still unfolding.

From Destinations to Products Parallel to these structural changes is a quieter but equally significant shift in how Nepal’s tourism offering itself is being defined.

For decades, Nepal’s tourism identity revolved around mountains, trekking, and adven-ture sports. While these still remain core strengths, they also constrained the country’s ability to attract travelers seeking different experiences. In the post-pandemic period, wellness  has emerged  as a powerful driver of global travel, and Nepal is naturally aligned with this shift. Its serene landscapes, spiritual traditions, and closeness to nature position the country as a compelling wellness destination—without requiring  radical reinvention.

Hotels and resorts have responded by integrating spa therapies, yoga and meditation re-treats, fitness and detox programs, and mindfulness-based experiences into their offer-ings. These  products appeal to both international and domestic travellers seeking slower, more restorative stays. Sustainability has become central to this niche, with many prop-erties emphasizing eco-friendly design, nature-based accommodation,

and low-impact tourism. Unlike adventure tourism, which is often seasonal, wellness  travel generates more consistent year-round demand, helping stabilize occupancies.

Agrawal points to religious tourism as a missed opportunity. “Nepal has Pashupatinath, while India has Kashi. Religiously, Pashupatinath holds immense  significance, yet only around 300,000 people visit in a month, compared to 300,000 in a single day in Kashi,” he said. “We have powerful products, but we have failed to fully capitalize on them.”

As traditional destination circuits approach saturation, the industry is gradually shifting its focus from places to products. Travelers today favor experiences over tightly packed itineraries, opting for longer stays with fewer activities. This has opened opportunities for peri-urban and off-beat locations to emerge as wellness  and retreat hubs.

“Beyond established destinations, there are few clearly packaged products being actively sold to international tourists,” said Shrestha. “As a result, attention is gradually shifting from destinations to products.”

Optimism is also growing around segments such as meetings, incentives, conferences, and exhibitions, as well as destination weddings. Early adopters are already seeing results, particularly  properties that combine scenic locations with large room inventories and banquet facilities. Larger hotels are benefiting from economies of scale, supporting events, casinos, and ancillary services that strengthen overall project viability.

A Bet on the Long Term

Taken as a whole, the entry of global hotel brands marks a turning point in Nepal’s tour-ism economy. International operators are betting on Nepal’s long-term destination appeal rather than short-term returns. Their presence has raised service standards, improved access to financing, and extended organized hospitality well beyond Kathmandu. At the same time, the sector faces significant headwinds. Intense competition, political shocks, infrastructure gaps, and execution risks pose real challenges to long-term sustainability of these properties. For now, the brands have placed their bet.

“By securing prime locations, brand presence, and management structures early, investors are positioning their assets ahead of the curve,” said Majumdar. “They are betting that Nepal’s tourism market will expand substantially in the years ahead.”

Whether Nepal can match that confidence through political stability, sustained infrastruc-ture investment, disciplined project execution, and more effective destination marketing will determine the outcome.

(This special report was originally published in January 2026 issue of New Business Age magazine.)