The worst may be over for Nepal’s luxury hotelsCompared to record losses in the last fiscal year, hotel revenues are up and losses are down in the second quarter, industry insiders say.
The worst may be over for Nepal's luxury hotels as the tourists are starting to trickle back. After posting record losses in the last fiscal year ended mid-July 2021, they can look forward to a rapid rebound as revenues are up and losses are down, say industry insiders.
Five-star property Soaltee Hotel Limited posted a profit for a change in its latest financial report, recording a net profit of Rs49.03 million for the second quarter of fiscal 2021-22 ended December 31, 2021.
In the same quarter of fiscal 2020-21, Soaltee had posted a loss of Rs115.14 million.
The hotel had shown a net loss of Rs186.04 million for the whole of the last fiscal year, compared to a net profit of Rs112.04 million for the previous fiscal year.
“The hotel’s income jumped significantly in the second quarter as the hotel resumed normal operations despite the scare of the third wave of Covid-19,” the hotel said. “The increase in the availability of vaccines had a positive impact on building traveller confidence.”
Soaltee Hotel Limited has been operating under the brand The Soaltee Kathmandu after the management contract with Holiday Inns (China) of the Intercontinental Hotel Group ended on May 14, 2021.
“Bookings are gradually increasing,” said Sudarshan Chapagain, vice-president of Soaltee Hotel Limited. “We are currently 30 percent booked. This is an encouraging booking in the current context.”
The hotel said it was expecting some degree of recovery this fiscal year due to the vaccination drive, although the risk of the new variant still remains.
The completion of Nepal’s second international airport in Bhairahawa has also cheered hoteliers.
“We are expecting an increase in leisure travellers at Kathmandu’s airport if Gautam Buddha International Airport in Bhairahawa begins operation,” said Chapagain.
Travel trade entrepreneurs say the new airport in the Tarai would attract airlines which are basically focused on the labour traffic.
Travel restrictions and an economic slowdown triggered by the Covid-19 pandemic delivered a massive wallop to Nepal's luxury hotels, decimating revenues and profits since 2020.
The government enforced a lockdown on March 24, 2020, and continued it until July 21 that year. Although hotels were allowed to operate by following health safety protocols, tourist numbers fell to rock bottom. All meetings and conferences were restricted that resulted in their complete closure.
On September 23 last year, Nepal eased travel restrictions by dumping the seven-day quarantine requirement and started issuing on-arrival visas to all vaccinated foreign travellers in a bid to bring its virus-ravaged tourism industry back to life.
Following the removal of the seven-day quarantine requirement, Nepal saw the highest post-Covid monthly arrivals in October amounting to 23,284 individuals.
Another five-star property Taragaon Regency Hotels Limited said its income jumped significantly in the second quarter of the current fiscal year which helped it to narrow its losses.
Taragaon, which is listed on the Nepal Stock Exchange and operates the Hyatt Regency Kathmandu, has posted a net loss of Rs1.25 million for the second quarter of 2021-22, according to a company report.
The figure is a sharp drop from the whopping Rs875.83 million loss the hotel posted for the same quarter of the last fiscal year.
Taragaon said in its financial statement that second quarter revenues jumped to Rs312.9 million which helped to bring down its losses to Rs1.25 million.
Taragaon Regency Hotels had posted a net loss of Rs49.64 million in the last fiscal year as against a net profit of Rs177.41 million in the previous fiscal year.
Oriental Hotels Limited too saw a steep drop in losses, posting a net loss of Rs80.02 million for the second quarter of 2021-22.
Oriental Hotels, which is listed on the Nepal Stock Exchange and operates the five-star Radisson Hotel in Kathmandu, had incurred losses amounting to Rs140 million in the second quarter of the last fiscal year.
The five-star Radisson Hotel in Kathmandu was the top loser as the property was closed for almost one whole year. The hotel showed a net loss of Rs260.47 million for the last fiscal year in its financial report.
The hotel said in its financial statement that the Covid-19 vaccination drive had helped to revitalise tourism activities.
The government's initiative to open the country to foreign tourists by following health safety protocols was the major reason behind the increased arrivals which helped the hotel's income to recover gradually, the Radisson said.
There are challenges of new Covid-19 variants as well, and newly constructed hotels have started operations. As the number of tourists has not increased accordingly, there are challenges ahead, it said.
Hotels say they are optimistic about the ongoing recovery in the tourism business.
Binayak Shah, vice-president of Hotel Association Nepal, said leisure travellers, particularly from India, were driving a post-lockdown travel demand recovery.
“All hotels suffered massive losses in 2020-21 despite unprecedented cost cuts. We expect a gradual recovery in revenues from the autumn of 2022, although it is unlikely to reach pre-pandemic levels before 2024 as Nepal’s demand recovery lags behind that of other regions,” Shah said.
“We have to do marketing and promotional campaigns more aggressively, particularly in India. People in India will travel in massive numbers. They are still not welcome in Thailand and Singapore, which are their traditional destinations. Nepal will be their preferred destination and Nepal needs to tap this opportunity,” he said.
According to Chapagain, there is hope of the hospitality industry recovering to some extent as India, which is Nepal’s next-door neighbour, has opened up fully.
Tourism-dependent Nepal hosted 230,085 foreign tourists in 2020, a plunge of more than 80 percent compared to 2019, reminding of the arrival figure way back in 1986.
According to the Nepal Tourism Board, the number of foreign visitors entering the country in 2021 totalled 150,962, the lowest since 1977 when the country hosted 129,329 tourists, a year after tourist numbers in Nepal reached six digits for the first time.
On March 10, Nepal threw the door wide open to tourists, removing all pre-arrival testing requirements for fully vaxxed travellers in a bid to recharge its moribund tourism industry.
Travellers who have not been vaccinated or have received only one jab need to produce a negative RT-PCR test not older than 72 hours.
According to the Department of Immigration, monthly arrivals reached 16,975 in January. The number increased to 19,766 in February.