Kathmandu's posh hotels are once again making a profit thanks to Indian tourists and Nepali partygoers. The luxury properties have returned to profitability as visitors from south of the border are filling their rooms while social events are keeping the banquet halls abuzz, industry insiders said.

All four five-star hotels listed on the Nepal Stock Exchange have reported net profits in the first quarter of fiscal 2022-23 ended September 30.

Soaltee Hotel Limited posted a first quarter profit of Rs112 million, according to the company’s statement.

In the same quarter of fiscal 2020-21, Soaltee had posted a loss of Rs21.16 million. The hotel said that its total income jumped 234 percent in the review period.

Tourism entrepreneurs said international tourism continued to show strong signs of recovery, with many countries reporting rebounding to more than 60 percent of pre-pandemic levels in the first 10 months of 2022.

In Nepal, arrivals are still less than half of what they were before Covid 19, a state which insiders blame on lack of promotion.

In October, the country received 88,582 foreign visitors, the highest monthly arrivals since March 2020.

Arrivals to Nepal during the period January-October totalled 473,563, according to the Nepal Tourism Board, the country’s official tourism promotional body.

“Many luxury hotels are doing well. It is because of the increased number of Indian tourists,” said Sudarshan Chapagain, vice-president of Soaltee Hotel Limited. “The social events organised by Nepalis, mainly banquets, kept hotels busy in 2022.”

According to him, the number of tourists from third countries is growing, but the figure is still below industry expectations.

Many hoteliers said 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.

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.

Taragaon, which is listed on the Nepal Stock Exchange and operates the Hyatt Regency Kathmandu, has posted a net profit of Rs24.67 million for the first quarter of 2022-23, according to a company report.

The hotel had suffered a net loss of Rs45.54 million in the same quarter of the last fiscal year.

Taragaon said in its financial statement that revenues soared to Rs212.3 million in the first quarter, resulting in a net profit of Rs24.67 million.

Taragaon Regency Hotels had posted a net loss of Rs45.5 million in the last fiscal year.

The hotel said in its statement that the government policy to restrict imports of certain goods to control the country's foreign exchange reserve had caused a shortage of goods.

Alarmed by the country's rapidly depleting foreign reserves due to runaway imports, the government on April 26 banned the import of 10 types of goods it has designated as luxury items.

Liquor (excluding raw materials), cigarettes and tobacco products are among the 10 embargoed products. The ban was lifted on December 6.

Another five-star property, Oriental Hotels Limited, reported a net profit of Rs11.19 million for the first quarter of 2022-23. The hotel’s net profit is a big change from the net loss of Rs56.36 million in the same period last year.

Oriental Hotels, which operates the five-star Radisson Hotel in Kathmandu, says tourism activities have been reviving gradually, but the numbers are still too small to fill the rooms of the hotels proliferating in Kathmandu.

The Chandragiri Hills, which operates a cable car and a five-star luxury resort in Kathmandu, reported a net profit of Rs13.10 million for the first quarter of 2022-23. The resort-cum-cable car, the new entrant in the Nepal Stock Exchange, had suffered a net loss of Rs23.73 million in the first quarter of 2021-22.

Travel trade organisation had expected that the completion of Nepal’s second international airport in Bhairahawa would boost arrivals. But their optimism turned out to be misplaced as only one international airline has come to Bhairahawa which conducts three flights a week.

The government plans to open the country's third international airport in Pokhara on January 1, but there is no sign of foreign airlines connecting the airport, the gateway to the Annapurna region.

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 resulting 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.

On March 10, 2022, Nepal threw the door wide open to tourists, removing all pre-arrival testing requirements for fully vaxxed travellers as it tried to recharge its moribund tourism industry.

The country reopened to foreign tourists, but there were no promotional activities, and arrivals did not improve.

“The country is open and normal. But who will tell that to the travellers of the world?” said Binayak Shah, senior vice-president of Hotel Association Nepal, which has more than 4,000 hotels in its membership.

“Obviously, the luxury hotels are back in business and have started making profits; but the small hotels are struggling here,” he said. “There are some Indian travellers coming, but tourist arrivals from the Western counties have slowed down,” said Shah. “We utterly failed to promote Nepal.”

Travel trade entrepreneurs say that political instability was one of the key reasons behind Nepal's poor performance. They say that the government is not serious about the country’s economy which has been going through rough patches.

According to industry insiders, Tourism Minister Jeevan Ram Shrestha, who lost the election as a candidate of the CPN (Unified Socialist), has been exercising his power and making haphazard decisions which will have no meaning at all.

On Friday, the minister officially declared Visit Nepal Decade 2023-33 amidst a function, prompting travel traders to ask why the programme was announced and for whom and who would take responsibility.

Analysts say challenges still exist for Nepal's tourism industry. Several countries, including South Korea and Japan where Nepalis travel in large numbers, have been witnessing massive spikes in Covid infections.

“Yes, there are still challenges. There are challenges with new Covid-19 variants,” said Shah.

Hotels say they are optimistic about the ongoing recovery in the tourism business.

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.