Pokhara’s iconic Fulbari Resort & Spa faces foreclosure after missing loan payments.

Located atop the scenic Chinnedanda hill overlooking Pokhara Valley, the landmark hotel has been facing hard times since it opened in 1996. Covid-19 was the last straw.

The consortium of banks that issued loans to the resort published a 35-day notice in Kantipur daily on Friday. If the Fulbari does not repay its loans, it will go under the hammer, say insiders.

“We cannot tolerate it any longer. It’s been 20 years the resort has not paid us for,” Krishna Bahadur Adhikari, the chief executive officer of Nepal Bank, told the Post.

A consortium of banks led by Nepal Bank had extended credit worth Rs1.31 billion to construct the five-star resort. The flow of loans started in October 1994, with a repayment period of seven years.

Other members of the consortium are the Rastriya Banijya Bank, the Employees’ Provident Fund and the now-defunct NIDC Development Bank.

The Fulbari loan was the largest for the consortium partners at that time. The resort, however, started defaulting on the loan in 2001 after its cash flow stopped.

“Interest and the principal may have ballooned to more than Rs15 billion,” said Adhikari. “We have given many chances to the resort, but there is no sign of the owner reviving the property. We cannot tolerate it further.”

Adhikari said there were many potential buyers.

“As the resort management had tabled its turnaround proposal by roping in Marriott International, we decided to give them a last chance allowing a debt restructuring plan,” said Adhikari.

The debt restructuring plan was approved on October 18, 2019.

Debt restructuring allows a company facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue operations and then pay back the loans.

The Fulbari was given six months to begin operations. The resort launched its renovation plan and decided to rope in Marriott, an international brand, to manage the hotel.

“But Covid-19 came and shattered the hopes,” said a senior employee of the company. The resort official said they were waiting for the District Court verdict as they had filed a plea demanding that the government fulfil its decision made a decade ago.

In 2012, the Ministry of Industry recommended that the resort, among 10 firms that were declared sick, be given an interest waiver. The Fulbari had been recommended to get the highest interest waiver of Rs616.35 million.

“We were surprised to see the auction notice issued by the lenders while the case is sub-judice,” said the resort official.

Piyush Bahadur Amatya, owner of the resort, did not respond immediately to the Post.

The Amatya Group invested over Rs3 billion in the resort in the initial phase of its construction.

At that time the resort was like no other in the country. There were few hotels catering to high-end visitors then, and there would be Russian tycoons milling around in the hotel lobby alongside Malaysian, Thai and Singaporean business people waiting to charter a helicopter to Annapurna Base Camp or the hunting reserve in Dhorpatan.

Spread over 209 ropanis, the 165-room property is a marvel of architecture, fusing classical Newar wood-and-brick style with a sleek, modernist aesthetic involving marble and tile.

The Fulbari has swimming pools, restaurants, spas and even its own golf course and helipad. If built today, the 140-ropani golf course alone would cost billions of rupees.

The resort also offers stunning scenery. To the north lies the unparalleled panorama of the Himalaya mountains, and to the south, a breathtaking view of the Seti River gorge.

But as the millennium approached, Nepal would undergo a series of political events that would put the country’s tourism industry into a spin. On December 24, 1999, an Indian Airlines plane was hijacked after taking off from Kathmandu, and the high-profile incident discouraged high-end tourists from India.

On June 1, 2001, the royal massacre occurred, bringing perhaps more attention to Nepal than it had ever gotten. Only, the image was of murder and bloodshed.

That year, 2001, was one of the lowest points yet for Nepali tourism as arrivals dropped 22 percent—just 361,237 tourists visited the country. The following year, arrivals fell even further, plunging 24 percent to 275,468.

In less than five years of its opening, a resort that was to attract high-spending tourists fell victim to the nation’s political vicissitudes, becoming a microcosm of how politics, conflict and a moribund democracy impact businesses.

This is especially true for the tourism industry, which relies so much on a welcoming image, promises of rest and relaxation, and a hassle-free environment.

As the Maoist insurgency, which began in 1996, the same year the Fulbari launched, reached new heights, the hospitality sector in Pokhara almost collapsed.

The period from 1996 to 2006, when the insurgency raged, was the worst for the resort.

After the fighting ended in 2006, the country embarked on a political transition that would drag on for another decade. Even when tourist numbers began to pick up, high-end clients remained few and limited to Kathmandu. New properties began to pop up, further diverting traffic away from the Fulbari.

The Fulbari hobbled through the 2000s and into the 2010s. Along with the resort’s financial woes, unionised workers started to demand the salaries and perks they had been promised.

In September 2017, after 21 years of operation, the Fulbari Resort & Spa formally closed down, citing a lack of visitors and ballooning loans.

Two-and-a-half years later in 2019, the resort decided to reopen under new management. But the bad luck continued.

“We were unfortunate again. The Covid-19 came and shattered all hopes again,” said the employee.

Failure means the property will go to auction.

“The property will come into operation. If it's not Amatya, another investor will run it,” said Adhikari, chief of Nepal Bank. “The iconic hotel is Nepal’s pride. It’s the country’s property. It should not be closed.”

Near the hotel, a new international airport is in the final stages of construction.