KATHMANDU: With the recovery in the tourism sector following the COVID-19 pandemic, Nepal's hotels and tourism-related companies have made significant profits.
Out of six companies in the hotel and tourism sector listed in the secondary market of securities, five have increased their profits by the third quarter of the current fiscal year. Among them, two companies have nearly achieved a 40 percent increase in profit. Despite one company still facing losses, it has managed to reduce its deficit.
According to the unaudited financial statements for the first nine months of the current fiscal year, Taragaon Regency Hotels increased its net profit by 39.54%, Chandragiri Hills by 38.82%, Soaltee Hotel by 11.08%, Oriental Hotels by 9.91%, and Kalinchok Darshan by 6.92%.
By the third quarter, Taragaon Regency Hotels earned a net profit of over Rs 333.2 million, compared to more than Rs 238.8 million during the same period last year. The company attributes its improved profit to a higher occupancy rate due to an increase in international tourists entering Nepal.
Looking ahead, Taragaon Regency Hotels aims to boost its income by increasing hotel occupancy through state-of-the-art technology and commercial strategic mechanisms.
Similarly, Chandragiri Hills' net profit exceeded Rs 107.9 million, up from Rs 77.7 million in the same period last year. Soaltee Hotel's net profit rose to over Rs 412.3 million, compared to Rs 371.1 million last year. Oriental Hotel's net profit increased slightly to over Rs 605.9 million from Rs 600 million last year. Kalinchok Darshan saw its net profit rise to around Rs 247 million from above Rs 203.1 million last year.
Three of these six companies have consistently distributed dividends to the investors. This year, Taragaon Regency Hotels, Soaltee Hotel, and Oriental Hotels continued this trend, unlike many companies of other sector. Soaltee Hotel distributed 5% bonus shares and 26.57% cash dividend, totaling a 31.58% dividend.
Oriental Hotels, which hadn't distributed dividends since 2018/19, offered a 5.26% cash dividend this year. Taragaon Regency Hotels provided 5% bonus shares and 11% cash dividend, totaling a 15% dividend. Chandragiri Hills, Kalinchok Darshan, and City Hotel, which had issued initial public offerings last year, are gradually moving towards dividend distribution.
The rise in income for these tourism sector companies is attributed to the increase in arrival of foreign tourists.
According to the Nepal Tourism Board, 416,069 foreign tourists visited Nepal by April 2024, a 27.42% increase from the same period in 2023. In 2023, over one million foreign tourists entered Nepal, marking the first time since the pandemic that this number was surpassed. The National Statistics Office estimates a 21.84% growth rate in accommodation and food service this year due to improvement in arrival of tourists.
Despite the overall improvement, City Hotel remains in a loss, though it has reduced its deficit. By the third quarter, City Hotel reported a net loss of over Rs 150.37 million, down from more than Rs 216.1 million in the same period last year. The company had projected a net profit of Rs 9.849 million for the current year before issuing its IPO in May 2023.
Director Tilak Koirala stated that the company is focused on reducing expenses and improving its financial situation. City Hotel has started generating income by renting out spaces for casino operations. The expansion of the banquet hall, which can accommodate 200 people, is near completion, and Koirala expects this to further increase income next year.
Additionally, City Hotel has reached an agreement with Hyatt International South West Asia to upgrade its current Hyatt Place brand to the Hyatt Centric brand, with the target to complete this upgrade by the first quarter of next year. The hotel is also prioritizing infrastructure changes to reflect the cultural heritage of the valley. Despite having a debt of over Rs 3 billion, Koirala is optimistic that the company will provide returns to investors within the next 2 to 3 years.
