Travel restrictions and an economic downturn precipitated by the Covid-19 outbreak have dealt a severe blow to Nepal’s luxury hotels, decimating revenues and profits. The business has been left in a state of disarray, and it is still struggling to recover from the devastating effects of the epidemic.
Insiders estimate that the country’s posh hotels suffered their worst-ever losses in the most recent fiscal year, which ended in mid-July. Based on the current scenario, which is primarily driven by tourist arrival figures, the industry could take up to two years or longer to recover to pre-Covid levels.
“The hotel sector has been left in complete turmoil as a result of this disaster. “It will take years for the hotel industry to recover,” said Yogendra Sakya, an entrepreneur in the industry. In the absence of a novel variety, we can anticipate a rapid return to normalcy within two years.” It will be determined by the immunisation campaign.”
However, despite the pessimism, there is a silver lining in that an increasing number of free independent travellers from the United States and Europe are travelling to Nepal despite warnings from their respective countries’ governments.
“These are ‘cowboys,’ who enjoy adventurous travel no matter what the circumstances are,” says the author.
Because of international travel limitations, Nepal’s hotel industry has been in a state of stagnation for a long time.
The financial statements of the three hotels that are publicly traded on the Nepal Stock Exchange demonstrate this. According to hoteliers, the position of these Kathmandu-based hotels provides an accurate representation of the situation of other luxury hotels and resorts throughout the world.
Because the five-star Radisson Hotel in Kathmandu was closed for over a year, Oriental Hotel Limited, which operates the hotel, was the top loser according to financial records for the fourth quarter of 2020-21, which concluded in mid-July.
The hotel stated in its financial report that it had incurred a net loss of Rs260.47 million during the previous fiscal year. According to the hotel’s financial statement, its net profit decreased by 489 percent.
When compared to the previous fiscal year 2019-20, the hotel’s total income or revenue was Rs599.36 million, which dropped by a shocking 89.50 percent to Rs62.69 million in the current fiscal year.
“The lockdown was imposed by the government on March 24, 2020, and it was in effect until July 21, 2020. Despite the fact that hotels were permitted to operate as long as they adhered to health and safety regulations, tourist numbers plummeted to record lows. The hotel stated in its financial statement that “all meetings and conferences were prohibited, which resulted in the entire shutdown of the establishment.”
“The hotel had to make do with almost little revenue during this time period. Because the government has promised that it will vaccinate the majority of the people by April 2022, we anticipate that the tourism business will rebound to its pre-Covid levels.”
Following the reopening of the tourism industry in September, Pawan Rajbhandari, director of sales and marketing at the Radisson Hotel Kathmandu, reports that the daily average occupancy of the hotel is currently at 20 percent. At the moment, it is survival of the fittest in the hotel industry.
As part of its efforts to restore life to its virus-ravaged tourism industry, Nepal lifted the seven-day quarantine restriction on September 23 and began providing on-arrival visas to all vaccinated foreign visitors.
Prior to the implementation of Covid, the travel and tourism industry contributed approximately 8% of the country’s gross domestic product and supported more than 1.05 million jobs, both directly and indirectly. Travel and tourism businesses were the hardest hit when travel restrictions were implemented in late March of last year.
Rajbhandari stated that the number of queries for reservations had been positive. “The statement by the government about the reopening came a little late.”
According to him, the United Kingdom government’s notification that Nepal has been removed from its no-go zone will have a positive impact on the tourism sector.
Arrivals from 47 countries, including Nepal, to the United Kingdom will no longer be required to go through hotel quarantine as of October 11. Only a PCR test will be required on or before day 2 of the experiment.
The Soaltee Hotel, which came in second place after the Radisson Hotel Kathmandu, experienced the greatest decline in revenue. A financial loss of Rs186.04 million was recorded by the hotel in the most recent fiscal year, compared to a net profit of Rs112,04 million in the preceding fiscal year.
Total revenue at the hotel was Rs1.26 billion in fiscal year 2019-20, but it fell to Rs431.37 million in the previous fiscal year, signifying a 65.87 percent decrease from the previous year.
After the management contract with Holiday Inns (China), a subsidiary of the Intercontinental Hotel Group, expired on May 14, 2021, the hotel has been operating under the name The Soaltee Kathmandu under its own brand. The hotel stated that they were anticipating some recovery in current fiscal year as a result of the vaccination effort, despite the fact that the risk of the new strain still existed.
As compared to the previous fiscal year, Taragaon Regency Hotels had a net loss of Rs49.64 million in the most recent fiscal year, compared to a net profit of Rs177.41 million the previous fiscal year. Nepal’s tourism business, according to the hotel, would not recover until the entire population has been vaccinated against the virus.
“While the Covid-19 outbreak has lowered the number of travellers, the country has seen an increase in the number of hotel rooms available.” The country does not have a well-developed tourism infrastructure. There is a volatility in the value of the dollar. In its financial statement, Taragaon Regency stated that “all of these issues have had an impact on the industry.”
Tourism-dependent Nepal welcomed 230,085 foreign tourists in 2020, a reduction of more than 80 percent from the previous year and a statistic that is reminiscent of the record for 1986. As of September, the total number of international arrivals in Nepal has reached only 76,864 people from all over the world.