December 23: Most of the sectors affected by coronavirus have started returning to normalcy but the hospitality sector that was most affected by the pandemic is getting into further trouble.

Stakeholders say that the hotel industry is facing existential crisis like the one it had faced 17 years ago during the civil war.

The hotel industry is facing such crisis as it is basically reliant on foreign tourists, who are yet to travel due to the threat of coronavirus.

Hotel entrepreneurs have started contemplating either voluntary retirement of staff members or to close their business after the cost of operation started exceeding the income of the hoteliers.

Hotel Annapurna, which started its operation 55 years ago, and Hotel Bajra have already rolled out the voluntary retirement plan.

Foreign tourists have not been able to visit Nepal due to the delay in developing vaccine against Covid-19, which was initially expected to get ready by October/November. Investors say that the hotel industry risks getting pushed back to the condition of 17 years ago when three hotels in Kathmandu and one in Lalitpur were forced to shut down due to the civil war.

In 2004/2005, Hotel Sherpa, Hotel Woodland and Hotel Blue Star were forced to shut down while Lalitpur-based Narayani Hotel also had to abandon its operation. At that time, hotels that were in operation since 35 years ago had to shut down after the arrival of tourists declined by 50 percent amid violence in the country.

“Back then, some hotels were closed as they faced a situation similar to that we are currently facing,” says Yogendra Shakya, operator of Hotel Ambassador.

“The hotel operators do not have any other alternatives than to reduce the cost of operation if we are to sustain in the market,” says Shakya.

He argues that the salary of staff members accounts up to 40 percent of the expenses and therefore they are forced to reduce the number of employees.

The hotel entrepreneurs have been paying minimal amount to the staffers since the start of lockdown in March till December end. But now, they say, they are on the verge of closure.

It has been learnt that Radisson Hotel is also contemplating closure for six to eight months. According to a source at the hotel, the administration is encouraging the staffers to take voluntary retirement. The hotel is planning to provide between 100 to 200 percent additional remuneration to lay off the staff. Forty staffers had opted for a similar scheme during the lockdown period. There are currently 380 staffers employed by the hotel.

One of the hotel entrepreneurs informed New Business Age that almost 50 percent of hotels in Thamel area have already closed their business.

The occupancy of hotels in Kathmandu has dropped to zero while the restaurants operated by those hotels are receiving guests occasionally.

However, some hotels like Hyatt Regency has been doing some business by organizing parties and marriage ceremonies.