Home Kathmandu Boom times revisit hotel sector

Boom times revisit hotel sector

Kathmandu, April 29, 2016: India’s most celebrated luxury hotel chain Taj re-entered Nepal this year by signing a management contract with Chaudhary Group (CG) Hotels and Resorts to operate the Meghauli Serai Jungle Lodge in Chitwan.

On Wednesday, another CG subsidiary, CG Holdings, announced that it had signed a management contract with the InterContinental Hotels Group in March to manage a proposed 200-room hotel in Jhamsikhel under the Holiday Inn brand. The InterContinental Hotels Group, one of the world’s leading hotel companies, will manage the five-star property which is scheduled to be completed by 2020.

Likewise, globally reputed bands like Marriott, Aloft, Sheraton and others have signed management contracts with Nepali entrepreneurs to establish their presence in Nepal.

Boom times are here again for the Nepali hospitality sector recalling the heady days of the 1970s and 1980s with leading global hotel brands returning to the country or poised to make their debut.

The 1970s and early 1980s were a prosperous period for tourism. It was during this period that many categories of luxury hotels were established and many foreign brands entered the country.

The boom in the hotel industry also contributed to the growth of other segments in the tourism industry.

“Obviously, Nepal’s hospitality industry has entered a new beginning. Corporate houses and industrialists who were out of the picture for decades have started making investments in the hospitality industry,” said Suman Pandey, president of the Pacific Asia Travel Association – Nepal Chapter. “And it’s a good sign.”

According to Pandey, the enthusiasm of investors to sink money in the hospitality industry and bring global brands shows that Nepal’s tourism has the potential to grow in leaps and bounds in the near future.

The country’s hospitality industry is set to see a dramatic growth in the next couple of years as investment in the sector has been witnessing a sudden spurt. Billions of rupees has been poured into the hospitality industry since 2011, and the momentum is growing.

Close to 10,000 rooms are under development in major tourist cities across the country.

“The promulgation of the Constitution is the major event that has encouraged investors to pour money into the hospitality industry,” said Pandey.

The entry of reputed hotel brands into the Nepali market is likely to shake up the existing market.

“It’s not that the entry of global chains in Nepal will change the industry overnight. But it’s sure it will create value for Nepal’s tourism,” said Prof Hari Sarmah, CEO of the Nepal Association of Tour and Travel Agents.

He added that reputed hotel brands decide to venture into a country after assessing the degree of risk and the suitability of the business environment.

“Heavy investments and marketing in the industry and the prevailing peace and stability are the ‘pull factor’ for the international brands in Nepal,” he said, adding that they could return as fast as they have come.

“Their sustainability depends on the business climate and competitiveness.”

In 2013, MIT Group Holdings Nepal, promoted by non-resident Nepali Shesh Ghale, signed an agreement with Starwood Hotels and Resort Worldwide Inc to manage a five-star hotel named the Sheraton Kathmandu Hotel.

The 225-room luxury property is slated to open by 2018. The Sheraton Kathmandu marks the re-entry of the Sheraton brand in Nepal. It had earlier managed the Hotel Everest in the 1980s.

Marriott International, another leading global hospitality company based in Maryland, US, has signed a management agreement with the Nepal Hospitality Group (NHG) to manage a three-star property named Fairfield by Marriott Kathmandu.

The proposed 10-storey hotel, currently under construction in Thamel, Kathmandu, will have 108 rooms and be spread over two and a half ropanis of land.

Another 221-room five-star hotel planned by the NHG in Nagpokhari, Naxal will also be operated under Marriott International’s banner.

Around 60 percent of the structural works of the deluxe property has been completed. The $35 million hotel will be the first international standard deluxe hotel in Nepal.

Likewise, Chhaya Centre has signed an agreement with the Aloft Hotel, one of the brands of Starwood Hotels and Resorts Worldwide. The hotel named Aloft Kathmandu is scheduled to come into operation by 2017.

Nepal’s hospitality industry was battered by an armed insurgency from 1996-2006.

Although tourists were not harmed by the insurgents, arrivals declined sharply. Even five-star hotel rooms were available for less than $50 per night during that time.

The post-conflict scenario was more painful for entrepreneurs. The advent of militant labour forced a number of star hotels to shut down.

Established hotels like the Woodland, Yellow Pagoda, Narayani, Blue Star, Sherpa and Durbar shut their doors.

There was no major investment in hotels until Jana Andolan II in 2006.