Nepali hotels, particularly in the Kathmandu Valley, may see a flurry of temporary closures as they have been struggling to pay their employees with no hope of tourists coming back in the near future, industry insiders said.

Almost all hotels closed their doors in March when the government announced a complete lockdown to prevent the spread of the coronavirus which wiped out tourism and business travel.

“The shutdowns were supposed to be temporary; but 10 months later, tourists are still not coming back,” said Binayak Shah, senior vice-president of Hotel Association Nepal. “The hospitality industry has been affected the most among all the sectors of the economy, but it has not received any support from the government.”

On July 21, after the government withdrew the stay-at-home order, Hotel Association Nepal unveiled a uniform payout structure: All staff, from front office workers to general managers, will remain on salary; but they will get the same pay.

The association, trade unions and hotel workers agreed on the uniform payout structure and signed a deal to prevent mass layoffs. The new pay structure lasted from April 13 till December 31.

For the last two weeks, the hotel association and trade unions have been holding a series of talks to find a way out to prevent hotels from going bankrupt and avoid retrenchment. But there has been no concrete outcome from the meetings.

“We understand that hotels are in a difficult situation. There are no tourists, and the situation in 2021 does not look good either,” said Madhav Pandey, president of the All Nepal Hotel Casino and Restaurant Workers’ Union.

“Like the July agreement, we are also looking for a win-win deal between hoteliers and employees.” He said that the uniform pay arrangement ended last week, and things had become more complicated. “But we hope to settle the issue within two weeks.”

The hotels are fighting for their lives and plan to implement a 'no work, no pay' system to stay afloat.

Shah said that based on the amount of business, hotels would retain a minimum staff and retrench the rest until the situation improves. “We have proposed a ‘work-based pay’ for the employees.”

Sinking under the weight of overdue payments, many hotels operating out of leased properties have already shut down for good, and many others are struggling to keep their heads above water.

Shah said that many hotels in Pokhara and Chitwan have been surviving due to the increased movement of domestic travellers; but in Kathmandu, people don't stay or dine in star-rated hotels.

Industry insiders say that many hotels want to get rid of old employees as they have become a big liability to the company—in terms of both work productivity and fat salaries. Some five-star hotels have started giving voluntary retirement to old employees which the trade unions said was a good way to give them a grateful exit.

Pandey said that they understood the current and unfolding situation, and wanted to protect both employees and employers.

The iconic Annapurna Hotel on Durbar Marg is closing its doors for an indefinite period due to a severe loss of revenue as the coronavirus snuffed out the tourism industry.

In May, hotels teetering on the edge amid the coronavirus closure had decided to cut their losses by remaining shuttered for six months, as they didn't expect tourists to visit Nepal for at least another year. But the government opposed their move.

The first casualty of Covid-19 was the Tiger Palace Resort in Bhairahawa. On March 23, the Silver Heritage Group, the Australian-listed gaming investor which operates two casinos in Nepal, had announced a temporary closure of its two properties—Tiger Place Resort and The Millionaires’ Club & Casino in Kathmandu.

Tiger Palace Casino Resort in Bhairahawa laid off all its 393 Nepali employees, effective from September 9, due to financial distress as the virus lockdown brought tourism to a halt.

In 2020, tourist numbers plunged by 80.78 percent from 2019 due to the Covid-19 pandemic, the worst year-on-year drop in arrivals since Nepal opened to the outside world in the 1950s.

According to the statistics of the Department of Immigration, 230,085 foreign tourists came to Nepal last year, the same number that visited the country in 1986.

Most of them came before Nepal started restricting visitors on March 20. Less than 15,000 individuals entered the country between April and December.