Hotels scrap uniform pay as tourism perks upEmployees will be paid according to their pay grades instead of a uniform salary, as was done during the lean times of the pandemic.
Nepali hotels on Tuesday decided to scrap the uniform payout structure and pay the employees according to their pay grade in a sign that tourism is bouncing back in the Himalayan republic.
As arrivals evaporated after Covid-19, hotels unveiled a plan in July 2020 to avoid layoffs. All staff, from front office workers to general managers, would remain on salary, but they would get the same pay.
“As the financial health of most of the hotel industry, the industry hardest hit by the Covid-19 pandemic, has been improving, we have reached an agreement with the trade unions and employees to resume the pre-Covid payout structure,” said Binayak Shah, vice-president of Hotel Association Nepal.
“But the rule will not be applicable to hotels that are completely or partially closed, or those that are being renovated.” Shah said these hotels would make a separate arrangement with their employees through mutual understanding.
On July 19, 2020, nearly four months into the country’s first lockdown, Hotel Association Nepal proposed the uniform payout structure.
As per the agreement, all employees working in deluxe five-star (more than 200 rooms) and five-star hotels were paid Rs10,000 and Rs9,000 per month, respectively.
Employees of four-star (more than 100 rooms) and four-star (less than 100 rooms) received Rs8,455 and Rs8,000 monthly, respectively.
Employees of three-star and two-star establishments were paid Rs5,000 and Rs4,300 monthly, respectively. One-star and tourist-standard hotels worked out a payment system based on mutual understanding between management and staff.
The salary system would be applied from April 13, 2020 to December 31, 2020.
But in January 2021, Hotel Association Nepal, which counts around 3,000 establishments among its membership, decided to extend the uniform payout structure as the tourism industry continued to lie moribund. Hotels also halved the salaries of their staff.
“The industry is reviving,” said Shah. “Inquiries and bookings have started to increase,” he said. “We expect to receive at least 75,000 tourists in the month of April based on the daily arrivals figure.”
According to hoteliers, many luxury hotels have been able to narrow down their losses as tourist numbers are beginning to swell.
Five-star property Soaltee Hotel Limited said it posted a profit for the first time in nearly two years, recording a net profit of Rs49.03 million for the second quarter of fiscal 2021-22 ended December 31, 2021.
Other big hotels, which suffered massive losses in the last two years, are also seeing their revenues rebound to previous levels.
Five-star property Taragaon Regency Hotels Limited said its income jumped significantly in the second quarter of the current fiscal year which helped to reduce 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.
Nepal received 42,006 foreign tourists in March 2022, the highest monthly arrivals in almost two years.
“This shows signs of tourism recovery to pre-Covid figures,” Deepak Raj Joshi, former chief of the Nepal Tourism Board, told the Post in a recent interview.
Arrivals in March 2022 were up 2.8 times the figure in March 2021. Insiders say arrival numbers are getting closer to pre-pandemic levels.
Nepal imposed tight border controls at the start of the pandemic on March 24, 2020 in an effort to keep out Covid-19. That helped to contain the virus initially, but the tourism sector was devastated.
According to the World Travel and Tourism Council’s 2021 annual research report, the share of tourism in Nepal’s gross domestic product nearly halved from 6.7 percent in 2019 to 3.6 percent in 2020 due to the pandemic.