On April 14, as Nepal ushered in the New Year, the ceremonial groundbreaking of Swonigha Resort Pvt Ltd took place in the scenic hills of Gundu, Bhaktapur. The project, which is being jointly developed by S&JG Holdings of Australia) and Implementing Experts Group (IEG) of Nepal, represents more than just another hotel—it signals a renewed effort by Nepali tourism entrepreneurs to position the country within the global luxury tourism market.

With an estimated investment of Rs 6 billion and a projected completion date of 2027, Swonigha Resort aims to blend local heritage with high-end hospitality. The property will include a branded hotel, timeshare villas and a curated mix of wellness, cultural and recreational spaces. More than just accommodation, it aspires to offer an immersive luxury experience rooted in nature and Nepali culture.

Just two weeks later, on April 28, regional luxury hospitality brand Atmosphere Core announced its entry into Nepal by partnering with Lost Horizon Jungle Resort to develop Aarunya Nature Resort by Atmosphere. The 51-room property in Banepa will open in the fourth quarter of 2025. The venture also plans to open two more properties in Nepal in the near future.

These developers are part of a broader trend. For decades, Nepal has been branded a budget travel destination as both policymakers and tourism stakeholders prioritized volume over value. While this approach has attracted sizable tourist flows, particularly from neighboring India and China, it has delivered limited economic returns.

A growing number of tourism entrepreneurs and analysts are now questioning the sustainability of this high-volume, low-yield model. They argue that Nepal must pivot toward attracting discerning, purpose-driven travelers—those seeking meaning, transformation and deeper engagements beyond standard sightseeing. This, they contend, is the key to building a more resilient and profitable tourism economy.

Nepal’s tourism industry has evolved through distinct eras. In earlier decades, the country attracted affluent Indian and Western visitors. In the 1960s and 70s, it became a haven for budget-conscious backpackers during the hippie trail era. The 1980s and 90s saw a surge in adventure tourism. Activities like trekking, rafting and mountaineering became Nepal’s signature offerings. More recently, the country’s tourism appeal has skewed toward demanding, adrenaline-driven experiences, often overlooking a lucrative demographic: travelers aged 50 to 60 who favor comfort, wellness and cultural depth over rugged adventure.

In fact, Nepal once catered to the elite. Iconic properties like Tiger Tops Jungle Lodge in Chitwan were among Asia’s most exclusive jungle retreats, with nightly rates exceeding $200 at a time when airfares were high and infrastructure minimal. That high-end travelers still came in significant numbers suggests Nepal’s untapped potential to reclaim its premium positioning.

But in today’s fast-evolving global travel landscape, old strategies no longer suffice. With the rise of experiential, wellness-oriented and transformative travel, industry leaders say that Nepal must reimagine its tourism model and focus on strategic branding, unique product development and streamlined air connectivity. To remain competitive, Nepal must offer more than just a destination to visit. It must become a place to be deeply experienced—a destination where travelers can connect with nature, culture and themselves in meaningful ways.

Nepal’s tourism industry is marked by resilience—shaped by cyclical booms, political instability, natural disasters and most recently, the COVID-19 pandemic—but also by missed opportunities. Despite its immense potential, the sector continues to underperform. Accommodation and food services contributed an average of just 1.5 percent to real GDP during a period defined by repeated economic shocks, growing at a modest annual rate of only 4%. Although tourist arrivals are gradually recovering post-pandemic, poor connectivity and inconsistent service quality continue to deter higher-spending visitors. As a result, average daily tourist spending remains at just $40, well that of comparable destinations. Nepal has yet to fully leverage its potential to build a strong, sustainable tourism brand capable of attracting wealthier visitors.

Despite attracting over one million tourists annually, foreign exchange earnings from tourism have yet to cross the $1 billion mark. Drawing a new blueprint, therefore, has become imperative. International arrivals have plateaued around one million, despite two high-profile national campaigns in 1998 and 2011. Although arrivals exceeded the one million mark again in 2023 and 2024, they still fall short of the 2019 peak of 1.197 million.

The urgency for this strategic transformation is underscored by a surge in investment in the industry. International hotel brands are entering the country at record pace, with developers betting on a future shaped not by crowded group tours but by curated, high-value experiences. According to Nepal Rastra Bank (NRB), the hotel sector has received over Rs 200 billion in loans from banks and financial institutions. This accounts for 3.7% of total bank lending. The key question now is: when will these investments begin to pay off?

“It is time to rebrand Nepal’s tourism with a clear message: we have something for everyone,” says Pankaj Pradhananga, founder of Impact Tourism and a strong advocate for a more inclusive and diversified tourism strategy.

Pradhananga adds that Nepal should no longer be seen merely as a holiday destination, but as a place for learning, unlearning and relearning. Unlike destinations such as Dubai or Singapore, which are renowned for their luxury and infrastructure, Pradhananga says Nepal offers profound physical, mental, and spiritual engagement through trekking routes, cultural immersion and tranquil landscapes. “Nepal can be a sanctuary for self-actualization,” he adds, urging the industry to shift its focus from volume-based tourism to attracting travelers seeking transformation.

He highlights Nepal’s potential to draw purposeful travelers by showcasing authentic experiences such as community homestays and women-led initiatives. To reach global audiences, he calls for an integrated marketing strategy that combines digital innovation, editorial endorsements and immersive campaigns—moving beyond crowded travel expos toward more creative and meaningful outreach.

Bijay Amatya, CEO of Kora Tours, agrees with Pradhananga. He advocates for regenerative tourism—a model that not only sustains but enhances our natural and cultural heritage. He adds that while Himalayas are a powerful draw, Nepal’s true asset lies in the warmth and resilience of its people, who leave lasting impressions on visitors.

Rethinking Nepal’s Tourism Strategy

Tourism experts agree that while India and China remain Nepal’s largest source markets due to proximity and open borders, emerging regions such as Eastern Europe, Scandinavia, the Middle East and the Nepali diaspora hold significant untapped potential. Purpose-driven segments like SAVE (Scientific, Academic, Volunteer and Educational) tourism offer promising avenues for meaningful engagement, they say.

Today’s travelers seek flexibility, connection and authenticity over rigid itineraries. This shift demands creative, direct-to-consumer marketing—an area where Nepal still lags. Participation in global travel fairs is no longer enough. What is needed is compelling storytelling that communicates directly with travelers and highlights Nepal’s diverse offerings.

Our previous strategies focused on boosting tourist numbers, but the emphasis must now shift toward quality. Nepal is not a budget destination—nor should it be marketed as one. While food, transport and hospitality involve costs, they also deliver distinctive value. High-end, long-stay travelers are increasingly drawn to Nepal’s inherent strengths: tranquility, mindfulness, spirituality and fresh, local cuisines. These traits make the country ideal for wellness retreats and silent escapes where visitors can slow down and reconnect.

India will remain Nepal’s primary source market, but continued engagement with traditional markets like the US, Europe, China and Australia is vital. Nepal must also strengthen its presence in Western Europe and tap into rising demand from Eastern European countries like Poland, Hungary, and the Czech Republic. Their growing economies and culture of exploration present new growth avenues. Scandinavian nations and Turkey offer further prospects, while Middle Eastern markets—supported by direct air connectivity and large Nepali workforces—deserve renewed attention. The Nepali diaspora and international students are another promising demographic, especially for SAVE and Roots tourism. These travellers often seek experiences rooted in purpose, education and cultural identity.

Nepal must identify key target segments—such as travellers aged 50 and above seeking meaningful, extended holidays—and curate experiences tailored to their needs. This includes accommodating seasonal travel patterns and offering attractive packages during shoulder seasons. Helicopter tours, curated treks and wellness experiences that integrate diet, meditation and spirituality are gaining popularity among affluent travellers. Initiatives like helicopter shuttles between Jomsom, Pokhara and Kathmandu show that luxury travel is feasible. But it must be supported by reliable infrastructure and professionally trained staff that meet global standards.

As Amatya puts it, “Nepal is not just a destination. It is a journey—into nature, into heritage and most importantly, into oneself.” It is time for Nepal to share that journey with the world and build a tourism legacy that future generations can proudly inherit.

However, as Khem Raj Lakai, president of the Pacific Asia Travel Association (PATA) Nepal Chapter, underscores, the country must prioritize safety and reliability—from roads and aviation to food hygiene and security. “Community awareness about tourism’s value and long-term sustainable planning is essential. Accessibility and inclusivity must also be improved to position Nepal as a global wellness hub in an area of growing awareness around mental health,” Lakai adds.

Sujeev Shakya, founder chair of Nepal Economic Forum, argues that Nepal must now build a broader ecosystem to support luxury tourism. While Everest has placed Nepal on the global map, it is being marketed at very low prices, with much of the revenue going to intermediaries, he says. “One can still climb the highest mountain in the world for just $50,000-60,000. In the 1970s, Everest expeditions were considered high-end luxury travel, with groups spending up to $2 million per trip,” Shakya says. “We have struggled to define luxury tourism properly or to understand how to earn more from fewer visitors in a sustainable way.”

The opening of the Shintamani Resort, according to Shakya, has placed Nepal more firmly on the global luxury tourism map, having been featured in numerous travel portals and publications. “Many promoters of luxury tourism have written about this property. Likewise, the Kathmandu and Dhulikhel properties of Dwarika’s Hotel are now synonymous with heritage and luxury,” he says. “But it is not enough to have a few iconic hotels, what we need is a comprehensive ecosystem built around luxury tourism.”

Premium Promise, Practical Problems

Despite growing interest from international hotel brands, several challenges continue to hinder Nepal’s growth as a premier tourism destination. Chief among these are inadequate infrastructure, poor road and air connectivity and a lack of investor-friendly tourism policies. Although global hospitality groups have signed agreements to enter the market, limited international flights options and weak logistical support have remained our major obstacles. These infrastructure gaps raise questions about Nepal’s ability to support high-end, long-stay tourism, particularly for luxury and leisure travelers. Persistent issues around cost, accessibility and readiness to accommodate premium guests must be addressed. While there are encouraging signs, attracting global brands will require improved policies, better infrastructure and a holistic approach to tourism development.

According to hotelier Hitesh Golchha, the core challenge lies in repositioning the country within the global luxury market. “Infrastructure is still a major bottleneck—especially at airports and along road networks. Simple, targeted upgrades—like repurposing the SAARC terminal and a luxury arrival lounge with a nominal fee—could significantly elevate the premium travel experience,” says Golchha.

Shakya adds that luxury travel is deeply personal and designed to exceed client expectations. “Bhutan has succeeded in attracting high-end tourists by combining thoughtful policies, government backing and strong private sector involvement,” he says.

Large-scale ventures in Nepal also face high operational costs. The cost of doing business is another serious concern. At Kavya Resort in Nagarkot, for example, investment has surpassed Rs 40 million per room. “Mountain and remote areas come with elevated development costs,” Golchha says.

Despite the opening of two new international airports, Nepal remains heavily dependent on Tribhuvan International Airport (TIA) in Kathmandu. Capacity limitations and a lack of expansion limit the number of tourist arrivals, as flight slots are largely taken by migrant workers and domestic travelers. This bottleneck affects hotel occupancy and suppresses demand in the tourism sector. To address these issues, Sumit Agrawal of Everest Hospitality and Hotels, which operates Marriott hotels in Kathmandu, emphasizes the need for infrastructure improvement and increased inbound tourism. He also highlights the high cost of international flights—exacerbated by VAT on airfares—as a major deterrent.

Experts also stress the urgency of removing Nepal from the EU’s air safety blacklist through technical upgrades and diplomatic advocacy. Beyond regulatory reform, Nepal must also promote its core strengths—especially the warmth and hospitality of its people, they say.

“There is a disconnect—our infrastructure is underdeveloped, yet travel costs remain disproportionately high,” one expert says. “The government must collaborate with the private sector to create enabling policies. Priorities should include improving airport efficiency and reducing airfares. These challenges can be addressed with the right coordination.”

High-End Hotel Rush: A Boon or Bubble?

Nepal is experiencing a surge in investment in luxury hospitality, driven by growing interest in high-end tourism. This country has seen a sharp rise in franchise hotels, with major international brands—such as Marriott (Marriott, Aloft, Moxy and Fairfield), Hilton, IHG, Dusit, Ramada, Accor and Lemon Tree—already present. Crowne Plaza and ITC are preparing to re-enter the market, while Intercontinental is also eyeing expansion.

Most of the newly built hotels operate under international brands. Globally recognized names like Hilton, Marriott, Taj, Hyatt, Holiday Inn, Mercure, Ramada and Dusit Thani now manage properties in Nepal. This investment wave is not confined to Kathmandu. In Chitwan, the Royal Tulip, a luxury brand of the Louvre Hotel Group, is nearing completion within the UNESCO-listed Chitwan National Park, featuring 64 apartments and villas. In Bhairahawa, a new Holiday Inn is under construction on Lumbini Road, and Butwal is preparing to welcome its first five-star hotel. Meanwhile, Radisson plans to open a high-end hotel in Biratnagar, integrated with a shopping mall.

Desh Bandhu Basnet, owner of Mercure Kathmandu, says the growth in premium hospitality reflects investor confidence, despite a supply-demand mismatch. “At Mercure Kathmandu, we offer locally rooted experiences, backed by Accor’s global standards. Market growth may be slow, but we are focused on creating value through differentiation,” he says.

Despite global uncertainties and domestic challenges, Nepal’s banking and financial institutions (BFIs) have increased their exposure to tourism and hospitality. In 2015, BFIs had extended Rs 11.15 billion in loans to the broader tourism sector and Rs 30.11 billion to hotels. By 2024, these figures had more than doubled to Rs 24.86 billion and Rs 195.71 billion, respectively

Hoteliers agree that a gap persists between the supply of hotel rooms and the number of international arrivals and direct flights. Agrawal believes concerns about oversupply are exaggerated. “We don’t have too many rooms—we have too few tourists. If the government can meet its target of two million annual visitors, the market will easily absorb existing capacity,” he claims.

Basnet, however, urges caution. He says that luxury hotels are capital-intensive, and with demand recovering slowly, properties without strong branding or sound financial strategies remain at risk. “Those who overestimated short-term growth and relied on aggressive financing models may face real difficulties,” he warns.

Powering Prosperity

The strategic importance of tourism extends beyond its economic contributions. According to the World Bank’s recent report, Unlocking Nepal’s Growth Potential, tourism offers a more employment-intensive path to growth than hydropower. “The tourism sector is labor-intensive, creating jobs across a wide range of skill levels—from guides and hospitality staff to artisans and transportation providers. Investments in tourism infrastructure not only enhance the visitor experience but also directly benefit local communities by generating employment and fostering entrepreneurship,” it states. “Unlike hydropower, which primarily requires labor during the construction phase and offers limited jobs once operational, tourism sustains ongoing employment opportunities.”

The tourism sector also stands to gain from the expansion of Nepal’s hydropower industry, which could strengthen the broader services sector. Access to reliable, clean energy would support the development of modern amenities—such as upscale hotels, restaurants and recreational facilities—that are essential for attracting high-income tourists. “Moreover, by positioning itself as a green tourism destination, Nepal could appeal to the growing segment of eco-conscious travelers who prioritize sustainability. This strategic pivot would not only improve infrastructure and service quality but also promote environmentally friendly experiences such as eco-trekking, wildlife conservation and cultural tourism,” the World Bank report states. “As global tourists increasingly seek destinations with a low environmental footprint, integrating green hydropower into Nepal’s tourism narrative could help establish the country as a leader in sustainable travel.”

Tourism Gets Industry Status, Tax Incentives in New Budget

The government, through the federal budget 2025/26, has tried to reposition Nepal on the global luxury tourism map. The federal budget has adopted a more market-savvy approach, aiming to attract high-end international tourists by leasing government land for jungle safaris, hill stations, and related infrastructure. The reclassification of hotels and resorts as manufacturing industries—thus making them eligible for tax exemptions—demonstrates a willingness to rethink conventional categories to encourage investment. There are also service-based incentives for tourism workers, which could help stem youth emigration by making domestic opportunities more viable.

The government has also announced plans to partner with a capable international airline to expand the capacity and improve the operations of Nepal Airlines Corporation (NAC). Deputy Prime Minister and Finance Minister Poudel while presenting the federal budget on May 29 said that NAC would be transformed into a public company, and its operations would be contracted out under a strategic partnership aimed at enhancing capacity, service quality, and professionalism.

The national flag carrier has struggled with operational inefficiencies and leadership issues, leading to mounting financial losses. The debt burden from aircraft purchases now exceeds to Rs 50 billion. The government has also outlined plans to develop Pokhara International Airport as a tourism hub. Likewise, Gautam Buddha International Airport in Bhairahawa is to be operated in a cost-effective manner, particularly catering to tourists and migrant workers. The budget includes provisions for necessary facilities and special concessions for cargo operations at these airports.

Despite being operational, both Pokhara and Bhairahawa airports have yet to attract regular international flights. To address this, the government plans to provide additional incentives and concessions to international airlines that operate a certain number of flights from these two regional airports.

In a long-anticipated move, the government has announced the institutional separation of the Civil Aviation Authority of Nepal (CAAN), which currently functions as both regulator and service provider. The budget outlines plans to split CAAN into two independent entities to enhance regulatory efficiency and service delivery. Additionally, the government plans to remove Nepal from the global aviation safety watchlist within the next fiscal year and to improve the safety and accessibility of domestic air services.

Targeting the World’s Largest Market

On New Year’s Day 2025, the Chinese Embassy in Kathmandu officially inaugurated Nepal Visit Year 2025, setting an ambitious target of attracting 500,000 Chinese tourists to Nepal.

The announcement came on the back of a strong rebound in Chinese arrivals in 2024. Nepal welcomed 101,879 China visitors last year—the highest figure in four years and a remarkable 67% increase compared to 2023. Overall, the country hosted 1.14 million international tourists in 2024, marking a 13% growth compared to the previous year.

Despite this optimism, Kalyan Raj Sharma, Managing Director of Adventure Outdoor Excursion, cautions that the actual number of Chinese visitors in 2025 may fall short of projections. While initiatives such as Spring Festival celebrations and chartered flights, including direct services to Pokhara, have helped generate interest, poor road infrastructure remains a major deterrent. According to Sharma, Lumbini is growing in popularity among Chinese tourists, along with adventure activities like paragliding and photography, which hold strong appeal in this market. He added that while word-of-mouth can support growth, Nepal must urgently invest in infrastructure to sustain and capitalize on this momentum.

Chinese travelers make up the world’s largest outbound travel market. Tapping into this demographic could significantly boost Nepal’s economy. Young Chinese tourists, in particular, seek authentic, immersive experiences—something Nepal is well-positioned to offer through trekking, expeditions, jungle safaris and photography tours. Many are repeat visitors, especially those interested in adventure and visual storytelling.

To maximize arrivals from China, tourism stakeholders are calling on Nepal to replicate targeted campaigns that have worked well in the past. While the Chinese government has actively promoted Nepal as a destination, these efforts must be matched by equally strategic and proactive initiatives from Nepali authorities. According to Sharma, a typical Chinese tourist spends between 8,000 and 10,000 Yuan per trip to Nepal. Souvenir shopping is an integral part of their travel experience, with Thamel seeing a rise in shops selling Thangka paintings and other cultural products. However, Sharma points out that the packaging and branding of these items often do not meet the high expectations of Chinese consumers who place a premium on quality and craftsmanship. Improving these aspects could encourage higher spending and elevate Nepal’s image as a premium destination.

(This news report was originally published in June 2025 issue of New Business Age Magazine.)