Most luxury hotels have slipped back into losses following the violent, anti-corruption Gen Z protests that erupted in early September and hit the country in the middle of its peak tourism season. The outlook remains bleak, with industry insiders warning that snap elections scheduled for March 5—during the spring peak season—could trigger fresh rallies and demonstrations, further unsettling tourist flows.

According to first-quarter (mid-July to mid-October 2025) financial statements of hotels listed on the Nepal Stock Exchange, the hospitality sector, which had been gradually recovering from the Covid shock and a subsequent economic slowdown, suffered a major setback after the September unrest. Most luxury properties reported net losses, while even those that stayed profitable saw a sharp slowdown in earnings growth.

With the autumn season (September to November) ending on a disappointing note, the industry is far from optimistic about spring (March to May), traditionally another strong period for tourism, as the country heads into an election cycle.

“The outlook is not optimistic,” said Binayak Shah, president of the Hotel Association Nepal. “Due to the Gen Z protests, most hotels are currently operating at a loss.”

The March 5 snap elections, triggered by deadly Gen Z-led protests, have reshaped political competition and heightened uncertainty.

Tourism, which contributes around 7 percent to Nepal’s GDP and supports the livelihoods of tens of thousands—especially in remote trekking regions—remains highly vulnerable to both natural and man-made disruptions.

“We know it’s an election year, and there will be protests and mass rallies,” Shah said. “Many countries have already issued travel advisories. This could affect the spring tourism season as well. Normally, tourists avoid destinations where elections are under way.”

Market analysis of listed luxury hotels reinforces the grim outlook.

Taragaon Regency Hotel Limited, which operates the five-star Hyatt Regency Kathmandu and has remained closed since September 9, said the Gen Z movement had a massive impact on a tourism industry that was only beginning to recover.

The hotel posted a net loss of Rs23.74 million in the first quarter of the current fiscal year, after profits plunged 48 percent. In the previous fiscal year, it had earned a net profit of Rs515.43 million, despite daily 10-hour closures of the country’s main international airport for five months due to taxiway construction.

The company said nationwide protests on September 8 and 9 involved vandalism, looting and arson at major hotels, causing extensive physical damage. As a result, Hyatt Regency Kathmandu has remained completely shut since September 9, severely affecting tourism-related business during the review period.

Department of Immigration data show that 237,584 tourists entered Nepal by air during the quarter—70,193 in July, 88,680 in August and 78,711 in September. This marked a marginal 1.7 percent increase from the same period last year. However, despite higher arrivals, business transactions declined sharply for hotels forced to close during the unrest.

At Hyatt Regency Kathmandu, guests’ luggage was looted and burned, many guests were injured, and one person died. The hotel warned that the incident could have a significant adverse impact on the tourism sector in the coming months as well.

Soaltee Hotel Limited, one of Nepal’s oldest hotels, posted a net profit of Rs123.58 million in the first quarter of fiscal 2025-26, but this was down 8.32 percent from Rs134.79 million a year earlier. The hotel’s total revenue stood at Rs627.94 million.

In its analysis, Soaltee cited global geopolitical tensions as a factor affecting tourist movement. It also pointed to weak infrastructure, concerns over tourist safety, political instability and protests leading to negative travel advisories in source markets as key constraints on sector growth.

Hotels also blamed a mismatch between supply and demand amid slowing arrivals, the return of strikes, inadequate promotion, poor public transport, rising airfares, reduced international airline seat capacity and natural disasters for their weak performance.

“We don’t have a proper revival plan,” Shah said. “Tourism is a sensitive sector and needs a serious overhaul, but the government is not paying enough attention. As a result, the industry is suffering.”

He added that while tourist arrival numbers appear positive, they do not necessarily translate into income growth for hotels. In 2025, Nepal welcomed just over one million tourists for the third time since the pandemic, recording a marginal year-on-year growth of about 1 percent.

Oriental Hotels Limited, which operates the five-star Radisson Hotel Kathmandu, reported a net loss of Rs29.55 million in the first quarter, with total income of Rs221.96 million. The company said its losses were not solely due to the Gen Z protests.

Total sales fell 11 percent, expanding the net loss by 87.28 percent, largely due to renovation work on 60 rooms in the old building, which led to the closure of around 100 rooms and restaurants during the period. ICRA Nepal Limited noted that Oriental Hotels’ occupancy declined to 37 percent in fiscal 2024-25 from 43 percent a year earlier.

Analysts have also pointed to a rapid increase in high-end five-star properties in the Kathmandu Valley, many tied to international brands, leading to capacity overhang and intensified competition.

City Hotel Limited posted a net loss of Rs55.65 million in the first quarter of fiscal 2025-26, with revenue falling to Rs115.53 million from Rs131.33 million a year earlier. The company cited reduced airline capacity due to expansion work at Tribhuvan International Airport, mass booking cancellations during the protests and rising competition from new chain hotels.

Chandragiri Hills Limited, which earned a net profit of Rs210.89 million in the last fiscal year, incurred a net loss of Rs12.43 million in the first quarter. The company said income fell 30 percent year-on-year after protesters burned down the bottom station of its cable car on September 9, forcing a temporary shutdown. Chandragiri Cable Car and Resort resumed operations in November.