KEDAR DAHAL
KATHMANDU, March 22
Investment of billions in the hotel sector seems to be under risk if the Nijgadh International Airport, listed among national pride projects, is not constructed in time. Over Rs 43.50 billion is being invested in the hotel sector alone by targeting the airport.
Domestic banks have invested in almost all the new five-star hotels. Around two million tourists must visit Nepal annually to maintain an average occupancy rate of 75 percent once these hotels are constructed and come into operation. But entry of such a huge number of tourists through the Tribhuvan International Airport (TIA) alone does not seem possible. The future of the banking sector is also linked with the Nijgadh International Airport and not just that of the tourism sector, according to entrepreneurs.
The government has also targeted increasing the number of five-star hotels to 20 through the private sector by 2020 in its 10-year strategic plan. Nepal currently has only 10 five-star hotels and the number will rise to 22 in the next five years if all the proposed hotels are completed in time. Entrepreneurs say construction of the Nijgadh International Airport should be started immediately as the TIA alone cannot handle two million tourists per year, and the number of tourists is needed for survival of the hotels.
“The government bodies may think that just a few entrepreneurs will sink if the hotels do not survive but a lot of banks have invested in these hotels. We must, therefore, look for an alternative immediately,” hotelier Yogendra Shakya says. He reasons that construction of the Nijgadh International Airport is essential also because tourists who stay in star hotels arrive by air. “There is no alternative to the Nijgadh International Airport as it can cater to 60 million passengers a year,” he adds.
The Civil Aviation Authority of Nepal (CAAN) has also stated that upgradation of the TIA will be impossible after 2023 and added that the master plan cannot be continued as per the plan. It stresses that the Nijgadh International Airport and the regional international airport in Bhairahawa are the alternatives to the TIA. The TIA currently has been catering to 4.80 million domestic and international passengers which is more than its capacity.
The government currently has been constructing the Gautam Buddha Regional International Airport in Bhairahawa investing Rs 7 billion. A similar regional international airport will also be constructed in Pokhara with investment of Rs 21 billion from this year. International secretary and treasurer of the Pacific Asia Travel Association (PATA) Basanta Mishra argues that these regional airports will also not solve the problem. “We need second international airport at any cost,” he says. He opines that there will be economic slowdown in Nepal if tourist arrival does not increase to five million even after all the infrastructure projects are completed.
Hotels have prepared infrastructure to cater to one million tourists during the Visit Nepal Year 1998. There was problem after a few four-star hotels were closed in 2003/04 but the country currently can handle 1.20-1.50 million tourists. There are currently 10 five-star, two four-star, 22 three-star, and two-star and one-star hotels and resorts, and 1,200 tourist standard and non-star hotels across the country. These hotels have around 40,000 beds.
Tourist arrival by air has been falling in Nepal with 585,981 tourists entering Nepal by air in 2014. The number is 1,861 less than that in 2013.
New five-star hotels
President of the Non-Resident Nepali Association (NRNA) Shesh Ghale, former president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Suraj Vaidya, Chhaya Devi Center, Sumargi Group, Silver Heritage and others have announced construction of five-star hotels in Kathmandu Valley. “Investment in the hotel sector has been arriving rapidly now. There is risk in investment but many problems will be resolved if the government were to open the TIA round the clock,” General Secretary of the Hotel Association of Nepal (HAN) Vinayak Shah says.
NRNs, Century Group and Silver Heritage are also preparing to construct five-star hotels outside the Valley. Summit Hotel Group has been preparing for upgradation of the hotels at Thamel and Kupondole. It aims to invest more than Rs 6 billion on that.
Few major hotels
Hotel Rooms Investment
Kathmandu Sheraton 218 Rs 8 billion
Kathmandu Aloft 220 Rs 3 billion
Sumargi Group 220 Rs 5 billion
NRN 200 Rs 4 billion
Ms Group 235 Rs 2.50 billion
Hotel Summit NA Rs 6 billion
Vaidya Organization 170 Rs 1 billion
CAAN 200 Rs 2 billion
The Century Group 120 Rs 1 billion
MS Group (Bhaktapur) NA Rs 2 billion
Silver Heritage NA Rs 9 billion
(Bhairahawa, Kakarbhitta and Kathmandu)
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