BY NEWBIZ TEAM
In recent times, there has been a noticeable surge in the construction of luxury hotels in Nepal. Several star hotels are already operational, both within and outside the Kathmandu Valley, and many more are currently in the construction phase. The expansion in the number of operational hotels is occurring at a rapid pace. Considering the increasing count of star hotels undergoing construction and swift operation, it is safe to assert that Nepal is currently experiencing an unprecedented boom in hotel construction.
Presently, in addition to the hotels being constructed by major business entities in Nepal, there is a trend of developing international chain hotels, some of which are already operational. Noteworthy examples include five-star establishments like Marriott, Hyatt, and Radisson, which are already part of the operational chain hotels. Simultaneously, renowned international chain hotels like Sheraton and Hilton are currently under construction and expected to join the league of operational star hotels soon.
According to statistics maintained by the Department of Tourism, there are currently 27 new five-star hotels and dozens of other star hotels under construction in Nepal. While 14 of these hotels are being constructed in the capital Kathandu, five are under construction in Rupandehi, three in Lalitpur, and one each in Morang, Mugu, Kavre, Kaski and Banke districts. Businessmen and investors are drawn to the hotel sector due to the promising prospects of Nepal's tourism industry, contingent upon supportive government policies that are expected to be business-oriented and liberal. Notably, besides India and China, there has been a gradual increase in the number of tourists arriving from America, Russia, and European countries in recent times.
The growing number of star hotels under construction and in operation signals a promising future for tourism in Nepal in the long term. Binayak Shah, the President of the Hotel Association Nepal (HAN), observes that Nepal's tourism potential in the future is highly optimistic, motivating investors to swiftly invest in hotel construction. He states, "While there may be some current challenges in the hotel industry, the overall outlook for the sector is positive." According to him, the surge in hotel developments in Nepal can be attributed to the confidence that investors and hoteliers have in the country's tourism, economic prospects, and population. He further explains, "Another significant factor contributing to the rise in the number of hotels is Nepal's strategic location between India and China, both experiencing the fastest economic growth globally. This underscores the substantial future potential for tourism in Nepal."
The steady improvement in tourist arrivals post the Covid-19 outbreak is a positive indication for hoteliers. Additionally, given that the hotel business is a significant contributor to government tax revenue and a major employer, supporting over 1 million people, the construction of new star hotels is underway to harness the untapped potential in the industry.
President Shah of HAN expressed that the scale of tourism in Nepal has broadened, and post the Covid-19 pandemic, hoteliers are optimistic about embracing new tourism concepts. These include eco-tourism, bird tourism, sports tourism, butterfly tourism, flower tourism, mushroom tourism, and adventure tourism, among others.
Under- construction five star hotels in Nepal
Five-decade old five-star history
Since the inauguration of the Soaltee Hotel in 2029 BS, Nepal marked the establishment of its first five-star hotel. From the inception at Soaltee Hotel to the current day at Hotel Lhasa International – the latest hotel to join the five-star club in the country - the history of five-star hotels in the country spans 52 years. Over this period, as per the statistics maintained by the Department of Tourism, there are presently 19 five-star hotels and 33 four-star hotels in operation.
In the last two years, three new five-star hotels have emerged, contributing to the addition of 4 five-star and 16 four-star hotels in the past three years. As per the Department of Tourism's statistics, there are currently 19 operational five-star hotels and 33 four-star hotels. The count of five-star hotels has risen to 19, notably with the elevation of Ichcha Hotel in Bara's Simara from a four-star to a five-star establishment in March and the inauguration of Hotel Lhasa International in Lazimpat on October 19 of the previous year.
Following are the five-star hotels in operation at present, according to the Department of Tourism:
A standard hotel is expected to meet specific criteria for physical services, facilities, quality of food, room cleanliness, parking capacity, and other amenities. Similarly, elevated standards apply to four-star or higher-level hotels, requiring the provision of diverse international cuisines with a dedicated restaurant for authentic Nepali food. Furthermore, facilities such as mandatory swimming pools, internationally accredited beauty salons, and adequate vehicle parking are stipulated for hotels exceeding four stars.
Within the Kathmandu Valley, the regulations dictate a minimum room count of 20 for one-star hotels, 40 for two-star hotels, 60 for three-star hotels, 80 for four-star hotels, 100 for five-star hotels, and 150 for five-star deluxe hotels.
In locations outside Kathmandu, every star-rated hotel is required to have five rooms less than their counterparts in the capital. Additionally, each hotel has the flexibility to offer various room types such as double bed rooms, suites, club rooms, interconnecting rooms, rooms with babysitting services, and disabled-friendly rooms, depending on their specific provisions.
In Koshi and Madhesh provinces, one five-star and two four-star hotels are currently in operation. Moving to Bagmati Province, there are a total of 12 five-star and nine three-star hotels. In Gandaki Province, statistics indicate the presence of two five-star and seven four-star hotels, while Lumbini boasts three five-star and 12 four-star establishments. Notably, there are no star-rated hotels in operation in Karnali Province, whereas one four-star hotel is currently operational in the Far-western Province. As of now, Nepal is home to a total of 19 five-star and 33 four-star hotels.
Similarly, based on the Department of Tourism's statistics, among the operational five-star hotels in the country, one is classified as deluxe, three as deluxe heritage, two as luxury heritage boutiques, and one as a regular heritage hotel. Additionally, there are currently 36 three-star hotels, 48 two-star hotels, and 43 one-star hotels in operation across the country.
According to the Department, Dwarika’s Kathmandu Village Hotel located in Battisputli, Kathmandu, is on this list. The hotel has a total of 137 rooms and 274 beds. Dwarika’s has given employment to 305 people. Heritage and boutique hotels in Nepal have a total of 339 rooms. There are 554 beds in these rooms. Heritage and boutique hotels have provided direct employment to 498 people.
Previously, only Dwarika’s Kathmandu Village Hotel Pvt Ltd held the classification of a boutique hotel. However, with the inclusion of three more hotels, the total number of boutique hotels in Nepal has now reached four. Collectively, these hotels offer 339 rooms and 554 beds. The Department distinguishes hotels that showcase traditional art, culture, and originality as heritage and boutique hotels. Notably, the Department has established separate classifications for heritage and boutique hotels. As per the Department's records, a total of four hotels fall under this specific categorization in Nepal. Particularly, hotels with distinctive design structures are now being individually recognized and listed under this specialized classification.
‘Secure Investment’
In the current scenario, the hotel sector is poised to accommodate 3.5 million tourists in Nepal, as stated by Shah, the president of HAN. Despite a halt in development work and programs during the pandemic, infrastructure related to tourism continued to be constructed swiftly. Shah expressed optimism, saying, “If just one percent of the tourists who travel to other countries from our neighboring nations, India and China, choose Nepal, the hotel business here will thrive.”
In recent times, Nepal not only boasts a good number of star hotels with international standard facilities, but there are also many such hotels currently under construction. President Shah of HAN highlighted that since the inception of the first five-star hotel in Nepal 52 years ago, the landscape of five-star hotels in the country has evolved significantly, both in terms of quantity and quality.
Sajan Shakya, the General Secretary of HAN, attributed the recent surge in the number of hotels in Nepal to investment security. He emphasized that the monetary value of land and buildings remains stable and tends to increase over time, making them attractive investments for industrialists and individuals with financial resources. Shakya stated, “Investing in land and buildings enhances their value in the future, prompting industrialists and affluent individuals to invest in the hotel sector.” He further noted, “The only periods when investments were withheld in the Nepali hotel sector were during the People’s War and the Covid-19 pandemic. With sustained political stability and a gradual rise in tourist arrivals, investments have been pouring into the country's hotel industry.”
Describing the hotel sector as a glamorous business, HAN General Secretary Shakya highlighted that its widespread expansion is attributed to high-profile public relations at both national and international levels within this sector.
New Int’l Airports Boosted Investor Confidence
The recent proliferation of star hotels in locations such as Bhairahawa and Lumbini, beyond Kathmandu, is directly linked to the construction of new international airports in the country. International airports play a pivotal role in driving the expansion of the hotel sector, which foster job creation through substantial investments and foreign currency earnings. With the operationalization of international airports like Gautam Buddha Inteernational Airport and Pokhara Regional Inteernational Airport in recent times, entrepreneurs have strategically shifted towards establishing upscale hotels, recognizing the promising prospects offered by enhanced air connectivity with international destinations.
HAN General Secretary Shakya says the inauguration of new international airports has boosted investors’ confidence to put their money in the hoitel industry. He explained, “With the establishment of two international airports outside Kathmandu, star hotels have emerged in areas like Bhairahawa and Lumbini.” Additionally, he stated, “Observing the potential for international flights and increased influx of foreign tourists, businessmen have strategically invested in hotels in these regions.”
Likewise, he noted that following the rise in the occupancy of foreign tourists in Kathmandu hotels, the occupancy of Nepalis in hotels outside Kathmandu has seen a positive trend. He stated, “Currently, domestic tourists show a preference for quality star hotels. The number of foreigners and Nepalis staying in star hotels outside Kathmandu is nearly equivalent.”
Star hotels in Nepal have hosted international dignitaries, including British Queen Elizabeth II and Princess Diana. Additionally, special guests include attendees and high-profile tourists participating in major events organized within the country.
Nepal's star hotels stand among the finest in South Asia. Recognizing the exceptional quality of services, several star hotels have been honored with prestigious awards, including the World Travel Award, World Casino Award, UNESCO Asia Pacific Heritage Award for Culture Heritage Conservation, Luxury Travel Guide, The Asia and Australia award, and more.
Suresh Chitrakar, the project manager of Sheraton Hotel, expressed that investors are venturing into the hotel business with the anticipation of a surge in the number of foreign tourists visiting the country. He highlighted that the thriving state of Nepal's hotel industry can be primarily attributed to the natural beauty of the region. Chitrakar emphasized that the recent increase in the number of hotels is a result of the country's rich culture and geographical diversity, ranging from the towering peaks of the Himalayas to picturesque valleys, serene lakes, and scenic trails that are particularly favored by tourists.
He expressed that Nepal is a tourism paradise, contending that the current number of hotels falls short in capturing the true beauty and tourism potential of the country. He remarked, “Nepal is a haven for tourists. In comparison to other countries, Nepal is not only cost-effective but also a land of unparalleled beauty. Given the recent upsurge in tourist interest in Nepal, it appears imperative to introduce more new hotels to meet the growing demand.”
Tourist Arrivals Expected to Rise
The hotel industry is intricately linked to tourist influx. The growth and expansion of the hotel sector are directly proportional to the number of tourists visiting the country. Businessmen emphasize that enhancing tourist arrivals is crucial for strengthening and advancing the hotel sector.
The allure of the Himalayas, high-altitude trekking, unique cultural sites, adventure sports, and breathtaking scenery serve as the key attractions drawing foreign tourists to the country. Enthusiasts of adventure sports, including mountain climbing, paragliding, rafting, bungee jumping, skydiving, high-altitude marathons, rock climbing, sky cycling, zip-lining, motorboating, canyoning, ultra trail running, trail racing, jeep flying, speed boating, and those interested in high-altitude trekking and hiking, find the picturesque landscapes of the highlands contribute to the increased occupancy and potential of hotels in the country.
Recent times have witnessed a substantial contribution from domestic tourists to the hotel sector, making a robust impact on the government through significant investments and job creation. With the rising purchasing power of the people, there is a notable increase in the occupancy rates of star hotels among domestic tourists, and this trend is on a positive growth trajectory.
15 out of 16 four stars became operational outside Kathmandu in last three years
In recent times, the construction and operation of star hotels have extended beyond Kathmandu to various locations. According to the statistics from the Department of Tourism, 16 four-star hotels have been established in the past three years, starting from the year 2078 BS. Notably, only one of these four-star hotels has been introduced in Kathmandu, while the remaining 15 are located outside the capital. The list includes Hotel Starlight in Nepalgunj, Kalpataru Hotel in Nepalgunj, Maurya Hotel in Bhairahawa, Hotel Mount Kailash in Pokhara, Hotel City Palace in Banke, Hotel Siraichuli in Chitwan, Himal Waterpark and Village in Birgunj, Heritage Hotel in Pokhara, Big Hotel and Ratna Hotel in Morang, Hotel Diyalo in Birgunj, Thamel Plaza Hotel in Kathmandu, Hotel Orion in Nawalparasi, Asian Hotel in Rupandehi, Hotel Bhotekoshi in Sindhupalchok, and Rome Regency Hotel in Pokhara.
As per Shah, the president of HAN, the primary catalyst for the operation and construction of star hotels in cities like Nepalgunj and Birgunj, outside Kathmandu, is the presence of casinos. The influx of a significant number of tourists from India, specifically drawn to the casinos in Birgunj and Nepalgunj, has led to the establishment and operation of numerous hotels in these locations.
Likewise, Birgunj stands as a pivotal commercial hub in Nepal, besides serving as a key transit point for the export and import of goods. The economic vibrancy in Birgunj and Nepalgunj surpasses that of other cities. Additionally, the presence of significant industries in the Simara Corridor has further fueled the establishment of numerous hotels in Birgunj.
Five-stars launched after Covid-19 (Box)
The Kingsbury Hotel has become the first five-star establishment to start operations after the Covid-19 pandemic. It officially opened its doors on September 13, 2021, at Bhagwan Chowk, Jhapa. According to the Department of Tourism's statistics, Kingsbury, directed and owned by Prakash Gotame, commenced operations following a 2 billion rupees investment. The hotel currently employs 150 workers and offers 100 beds across its 82 rooms.
Similarly, it appears that the Hyatt Place in Tahachal opened immediately after the completion of The Kingsbury Hotel. According to the statistics, Hyatt Place, with Shakti Kumar Golyan as a major shareholder, was constructed with a total capital of Rs 2.8 billion. The hotel currently employs 183 workers and offers 306 beds across its 153 rooms.
Ichha Hotel, located in Simra, Bara, has recently been upgraded from a four-star to a five-star establishment. The Shakti Kumar Golyan Group owns and holds the majority of shares in the hotel, which was constructed with a total capital investment of Rs 2.8 billion. The hotel, which has been operational since March 26, 2023, employs 150 workers and boasts 89 rooms with a capacity of 100 beds.
Hotel Lhasa International, located in Lazimpat, Kathmandu, is the newest five-star establishment that opened its doors on October 23 of the previous year. Operated by a group that includes Dorje Galzen Lama, the hotel was constructed with an investment totaling Rs 2.8 billion. With a capacity of 107 rooms and 177 beds, Hotel Lhasa International offers a luxurious accommodation experience.
The Covid-19 epidemic prevented the opening of any five-star hotels in 2020. In the preceding year of 2019, prior to the onset of Covid-19, two-star hotels were inaugurated. Notably, both Hotel Marriott in Naxal and Hotel Aloft in Thamel had commenced operations a year before the global pandemic unfolded.
The year 2023 served as a preparation phase, and numerous events are scheduled throughout the tourism decade starting from next year. The relevant ministry and we are collaborating closely for this purpose.
In his budget speech for the fiscal year 2023/24, Finance Minister Prakash Sharan Mahat earmarked Rs 2.13 billion for the identification of new tourist destinations and the development of infrastructure. Minister Mahat emphasized the goal of transforming the country into a secure and appealing tourist destination. Additionally, he highlighted the intention to boost the contribution of the tourism sector to the national economy through the promotion of tourism and infrastructure development.
Likewise, the government augmented the budget for the tourism sector by Rs 2.58 billion, bringing it to a total of Rs 11.96 billion. The announcement highlighted the government's commitment to conserving and promoting cultural heritage, developing these areas as tourist attractions, and ensuring the safety and quality of air transport services. It's noteworthy that in the preceding year, the allocated budget for the tourism sector stood at Rs 9.38 billion.
Simultaneously, Finance Minister Mahat declared that the years 2023 to 2032 will be commemorated as the tourism decade. Setting an ambitious goal for the last year of this decade, the government aims to attract 3.5 million tourists to Nepal in 2032. Furthermore, there's a shorter-term target of achieving 1 million tourist arrivals in 2023, a goal that the government is on the brink of realizing.
According to Maniraj Lamichhane, the Director of the Nepal Tourism Board (NTB), the government is close to reaching the 1 million tourist arrival target for 2023. NTB's statistics reveal that by November 2023, the number of foreign tourists entering Nepal had already reached 918,308. Director Lamichhane expressed confidence that the remaining 80,000 tourists needed to meet the government's 1 million target will easily be attained by the end of December.
Likewise, NTB Director Lamichhane indicated that the government is strategically planning the tourism decade (2023-2032). He explained, "The year 2023 served as a preparation phase, and numerous events are scheduled throughout the tourism decade starting from next year. The relevant ministry and we are collaborating closely for this purpose." Emphasizing the coordinating role of the Ministry of Tourism, Lamichhane stated, "The Ministry of Tourism is our guiding force. We function as a support organization and will adhere to the directives provided by our guiding authority."
He expressed confidence that by the year 2032, Nepal can effortlessly attract 3.5 million tourists annually. Lamichhane highlighted Nepal's allure as a stunning country nestled between two prominent nations, and with South Asia experiencing economic prosperity, he believes the tourism potential in Nepal is vast.
In his argument, Lamichhane projected a gradual annual increase of 10 to 15 percent in the number of tourist arrivals. Anticipating the operationalization of the international airport and considering the ongoing infrastructure development, he sees the country's tourism volume expanding. Lamichhane contends that welcoming 3.5 million tourists a year by 2032 is not a formidable challenge given the current state of infrastructure development.
Addressing the current absence of international air connectivity at the country's new international airports, Lamichhane clarified that this situation does not imply a persistent condition over the next decade. He reiterated Nepal's inherent attractions, including its scenic beauty, ethnic diversity, mountains, religious tourism destinations, and adventure tourism options, asserting that the influx of 3.5 million tourists is easily achievable.
