In December 2022, the Nepali authorities adopted a “liberal policy” to allow nighttime businesses across the country, including in Thamel, to flourish after almost a decade and a half to boost economic activities.

As per the decision, the liquor shops were allowed to stay open till 10 pm. Similarly, restaurants were permitted to open until midnight and dance bars and clubs were allowed to operate till 4 am.

The government has now adopted an “open policy”.

Starting Saturday, Thamel will go live 24/7.

Economists say the decision would benefit the tourism industry as a vibrant nightlife has a big economic impact.

Sahadev Dhamala, vice president of the Thamel Tourism Development Council, said the home minister would formally announce the start of 24/7 nightlife in Thamel, the country’s tourist hotspot.

“When we think about the night, the first things that come to mind are noise and alcohol,” said Dhamala. “But the night has a much broader meaning.”

The nighttime economy is a source of new jobs and new income for the city. A city with a vibrant nightlife is much more attractive to visitors. A city that offers 24-hour transport, as well as restaurants and shops that open late, is much more attractive to those who come to visit.

Kathmandu and other major cities of Nepal are seriously lacking in nightlife, which is a major spending area for tourists across the world.

Usually, the country goes to sleep by 7 pm, while the capital city retires by 8 pm, which effectively means no business during the night.

Throughout its long history, nightlife has been central to Thamel’s identity, but except for a few bars, it usually goes off to sleep before the clock strikes 10. The authorities say shops, restaurants and bars have to be closed by 10 pm, for security reasons.

The decade-long insurgency (1996-2006) that killed 17,000 people heightened security concerns across the country. Security was beefed up during the second people’s movement in 2006. Logistically, until mid-2017, the country was facing acute power outages, of up to 18 hours a day. All these events had a profound impact on nighttime tourism in Nepal.

The situation, however, has improved and things are far better. After ending a long-drawn transition, the country is on the cusp of economic expansion and it relies heavily on tourism. Nepali authorities for a long time have been averse to nighttime businesses, citing various reasons, including security.

According to Dhamala, they have estimated that opening Thamel would create 25,000 additional jobs. An estimate shows that Thamel currently employs—directly and indirectly—50,000 people.

There are almost 9,500 businesses and 2,700 property owners.

“Allowing businesses 24/7 in Thamel, according to our estimates, will raise 25 percent extra taxes to the government,” said Dhamala.

According to Dhamala, during the era of the hippie boom in Jhonchhe at Kathmandu Durbar Square, Thamel was a single street, spanning approximately 20 to 30 metres.

However, the 1980s ushered in mass tourism, attracting budget-conscious tourists and backpackers. This transformation marked Thamel’s shift from a residential area to a bustling tourism precinct, offering new business opportunities for residents and entrepreneurs. This eventually transformed Thamel into a renowned business district within the tourism industry.

“It’s indeed a welcome move,” said Basant Raj Mishra, a senior tourism entrepreneur.

“The decision to allow businesses to stay open for longer will promote tourism as well as increase job opportunities in the country,” said Mishra. “Let’s start this initiative on a trial basis. If this succeeds, we can implement it in other areas too.”

Although there have been no studies on the economic impact of nightlife, tourism industry insiders say tourists spend double during nighttime as compared to daytime.

According to him, the main thing is to expand the products so that tourists will spend. “Currently, the per day spending of a tourist is currently $44, which is too low. With enhanced products, per day spending can be increased to $75.”

Since the start of the Covid pandemic, Nepal has been going through an economic slowdown with most economic indicators remaining below par. The situation has been further exacerbated by the Russia-Ukraine war, which has fueled inflation across the world.

As a result, tourist movement has slowed globally, including to Nepal.

While investors have invested heavily in the hospitality industry, the country has not received enough tourists compared to the volume of investment, Binayak Shah, president of the Hotel Association of Nepal said in a recent event in Kathmandu. “There is a huge gap between supply and demand in the hotels.”

According to the Nepal Tourism Board, the country's tourism promotional body, arrival numbers crossed the million mark in 2023, the first time in four years. This is the third instance that Nepal has welcomed over a million tourists.

“We are at a crossroads. We can accommodate 3.5 million tourists a year but are getting only a million,” said Shah. “On average, the hotels have 25 percent occupancy and are incurring losses, and yet big hotels have up to 90 percent occupancy.”

In early 2014, the government announced that Thamel and Durbarmarg would open round-the-clock to encourage tourism-related businesses. Before that, Thamel used to operate until midnight.

But a certain group went to court against the government’s move, because there was no clear demarcation between residential and commercial areas in Thamel and certain people claimed that noise would disturb the harmony of residential areas. The court then ordered Thamel to open only until 2 am.

The properties that have proper lighting and sound-proofing systems in their clubs were the ones allowed to open until 2 am.

“We now have guidelines,” said Dhamala of the Thamel Tourism Development Council. “The properties—bars, discos and clubs—that don’t have proper sound-proofing should close after 10 pm.”

He said that there are 111 CCTV cameras for video surveillance in Thamel areas to ensure security.

“As per the guidelines, there should be no overpricing or the menu should not differ much between the day and night-time services,” said Dhamala. “People will not be allowed to make noise in the street.”

“We are working to identify appropriate places for parking,” he said.

According to him, a monitoring team has been formed under an assistant chief district officer, who will regularly monitor the areas. “The body has been given the power to close any shops that violate the rules.”

Economists say a convenient transport system, trained manpower like taxi drivers and enhanced security would make nighttime business vibrant. It will also send a positive message to foreign investors that Nepal has become an open society and its security has been enhanced.

In Kathmandu, ride-hailing apps like Pathao, InDrive and others have become a boon for travellers during both day and night.

The direct contribution of Nepal’s travel and tourism to the GDP in 2022 was Rs101 billion (2.1 percent of the GDP), according to the annual World Travel and Tourism Council research report.

The total contribution of travel and tourism to the GDP —including wider effects from investment, the supply chain and induced income impacts—was Rs297 billion in 2022 (or 6.1 percent of the GDP).

This primarily reflects the economic activity generated by sectors such as hotels, travel agents, airlines and other passenger transport services (excluding commuter services).

The report said that travel and tourism generated 311,125 jobs directly in 2022 (1.9 percent of total). This includes employment by hotels, travel agents, and leisure industries directly supported by tourists. In total, 1.08 million jobs were directly or indirectly created.