Nepal's luxury hotels basked in all-time high profits as incessant banquets and other events more than compensated for lacklustre tourism growth.

Profit levels in the last fiscal year surpassed pre-pandemic figures as the end of social restrictions unleashed pent-up demand for parties and conventions, hoteliers said.

According to insiders, demand from holidaymakers swelled, but they were careful about spending, and it was the strong growth in banquets and other celebrations that really made the five-star hotels shine.

The Soaltee Hotel posted an all-time high net profit of Rs545 million in the last fiscal year ended mid-July, according to its fourth quarter company analysis report published by the Nepal Stock Exchange.

The report shows that the Soaltee's net profit soared by 83.40 percent year-on-year.

In terms of revenue, the hotel earned a record Rs2.24 billion in the last fiscal year, up 64.28 percent from the same period in the previous fiscal year.

“Obviously, events pushed up our sales since Covid social restrictions were eased,” said Sudarshan Chapagain, vice-president of Soaltee Hotel Limited. “We adopted operational efficiencies and focused on revenue too.”

He said that the Soaltee saw 70 percent occupancies throughout the year. “Bookings for the upcoming tourist season are also encouraging.”

The Soaltee has opened new properties in Itahari in eastern Nepal and Nepalgunj in western Nepal, including in Chitwan. “All of them are doing well,” said Chapagain.

The hotel has planned to add at least three new properties in Pokhara, Nagarkot and Simara. “We will make the announcement of the new properties in September,’ said Chapagain.

Foreign tourist arrivals increased significantly to 862,992 in the last fiscal year from 374,147 in the previous fiscal year, according to Nepal’s central bank report.

The income from tourists jumped by 89.6 percent to Rs61.52 billion in the review year, compared to Rs32.45 billion in the previous year.

“It’s an encouraging sign that hotels are making big profits,” said Binayak Shah, president of Hotel Association Nepal, the apex body of hotels and resorts in Nepal.

According to Shah, demand for banquets pushed up sales. “This shows how the meetings, incentives, conferences and exhibitions (MICE) segment is a lucrative part of Nepal’s hospitality industry. But if we consider the foreign tourist segment, it’s still negligible given the supply of hotel rooms,” he said.

Taragaon Regency Hotels Limited also saw a record turnover in the last fiscal year.

The company, which owns the luxury five-star hotel under the brand Hyatt Regency Kathmandu, said in its financial statement that its net profit in the last fiscal year rose 100 percent year-on-year to Rs382.64 million.

The hotel exceeded its record profit of Rs352.43 million in fiscal 2018-19. Its income in the last fiscal year doubled to Rs1.38 billion.

Oriental Hotel Limited, another five-star property listed on the Nepse, saw its net profit jump more than six times in the last fiscal year, reaching Rs178.43 million. The hotel had suffered a net loss of Rs24.60 million in the previous fiscal year.

The company, which operates the five-star Radisson Hotel in Kathmandu, said in its financial statement that the total annual revenue jumped 92 percent year-on-year.

Despite the robust profit growth, it fell short of its all-time high profit in fiscal 2018-19. Oriental Hotel Limited posted a record net profit of Rs297.83 million that year.

The country's luxury hotels say that the last fiscal year was better than expected.

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 which 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.

Hoteliers say that the Yeti Airlines plane crash in January hit tourist movement briefly. After the resumption of flights from different Chinese cities to Kathmandu in March, arrivals have surged.

However, old players are worried that new hotels will create an imbalance in the demand and supply of rooms. New supply is here, and it's going to cause appreciable pain for the hospitality industry, insiders say.

“Nepal can supply over 3 million room nights annually. But we are receiving less than a million tourists,” said Shah. “This shows that the gap in demand and supply is growing.”

The hotels said in their statements that they were concerned by the low supply of international air tickets, besides natural disasters that could hit the country’s tourism.

“Obviously, we have three international airports now. But they are not marketed well,” said Shah. “The two new airports should bring at least 1 million tourists combined to match the mushrooming hotels and resorts in Nepal.”

Newly listed on the Nepse, Chandragiri Hills Limited posted a net profit of Rs151.16 million in the last fiscal year.

But another five-star property, City Hotel Limited, showed a net loss of Rs273.63 million. City Hotel, which owns the Hyatt Place, came into operation on November 15, 2021.

Hoteliers say that there is a big gap in terms of occupancy in hotels. According to them, while four- and five-star hotels are 70 percent occupied, hotels below three stars have barely 30 percent occupancy.

Non-listed companies also experienced a better occupancy rate, a higher number of guests at restaurants and a large number of events, insiders say. The profits of the Kathmandu Marriott Hotel and the Aloft Kathmandu are even better, they say.