NEPAL: Nepal’s Tourism Industry Doing Better

The best time to visit Nepal is now. Autumn (September- November) is considered the most pleasant time to visit Nepal. The weather is favourable and the mountains are visible at this time of the year. This season is known as the high tourist season or peak season for tourist arrival.

However, this year even in the peak season tourism entrepreneurs and hoteliers are not very optimistic about the footfall. Accessible air connectivity, affordable air fares, construction of proper road network and electricity are the pre-requisites which are still major challenges to overcome for tourism development. Unless these requirements are met the industry cannot move forward. Likewise, right promotional activities in the right markets are essential.

In this high season for the tourism industry, Nepal Airlines’ aircraft suffered a tyre burst and the Tribhuwan International Airport (TIA) runway was closed for a while. And, this was just at the start of the high season. TIA has developed cracks and potholes and there are several technical glitches in national aircrafts. The airport itself is overstretched with more tourist arrival expected. Incidents such unruly setup disseminates a negative image of the country and its infrastructure and has a direct impact on the tourism industry .

“For the past 28 years Nepal Airlines Corporation (NAC) has not invested in a single aircraft. This is the root cause of the problems that we are facing at present,” claims Sugat Ratna Kansakar, Managing Director of NAC. “It is a fact that a country that has a strong national carrier, attracts higher number of tourists. For instance, Spain, France, Thailand, Singapore and Malaysia have enough investment in aircrafts and as a result their tourism industry is developed,” he says.

According to him, NAC is now focussing on expansion strategy and improvement of management issues in parallel. He adds, “NAC will procure two wide body aircraft in the next two years and will increase the destinations accordingly.” He feels that there is no alternative to expanding the fleet as that will also impact air fares. “Airfare to Kathmandu is expensive compared to other destinations such as Thailand or even cities like Jaipur in India. How can we expect high number of tourists with such high airfares?” he questions.

“It is true, that September to November is the traditional high tourist season but our tourism sector has not effectively recovered from the repercussions of the massive earthquake followed by the economic blockade in 2015,” says Ashok Pokharel, President of Nepal Association of Tour Operators (NATO). “We are as prepared as we were in 2014 to attract tourists. However, we have failed to make the leap to ‘2017 and beyond’ preparedness.” He feels that in the coming days the industry will observe the same lackadaisical destination promotion patterns, similar tourist profiles, severe price competition, mushrooming of illegal operators and unhappy tourists which will make things worse.

“In this corresponding period in 2014 we had witnessed overbooking,” says Raju Bikram Shah, Group General Manager, Shangri-La Hotels and Resorts. However, according to him, this year the booking will not exceed 90 per cent.

“The guests who have booked into hotels and resorts now are not here for travel purposes; they’re here on business,” he mentions.
This shows that Nepal might be losing its sheen as a travel destination. According to him, the occupancy in Kathmandu is better than that in Pokhara. “Pokhara is yet to recover from last year’s lull. The occupancy rate there is hardly 70 per cent,” he informs.

Forbes magazine listed Pokhara as the cheapest destination to travel to stating that USD 15.84 per day is enough to stay there. For those who like ‘cheap’ destinations this is, indeed, good news according to entrepreneurs. However, ‘high yield’ tourists do not appreciate spending their money on ‘cheap destinations’.

They are willing to pay good money but want good value in return. Tourism entrepreneurs are aware of the fact that ‘cheap’ destinations unfortunately drag themselves down and sometimes take the industry with them.

“A price war exists and is primarily propagated by illegal operators who are either unlicensed or do not pay taxes or those who are in the business with the clear intention of defaulting on their debts to suppliers like hotels, domestic airlines and transport suppliers,” Pokharel claims.

This uneven playing field is harming the capacity of the national economy to absorb whatever taxes were going to come as these operators neither pay VAT or income tax or any other taxes, according to Pokharel. According to him there exist these illegal operators. They are surely siphoning the money off into the ‘alternative economy’.

The authorities are also aware of this rampant discrepancy but has done little to curb it. Therefore, price based unhealthy competition in the industry is eating it from the inside and destroying whatever little chance there is for it to recover.

While NTB is trying to promote Nepal in different markets through various strategies, clear and ambitious goals need to be set with greater participation and involvement of all stakeholders. “Tourism is on the right path to recovery. We expect that this year the tourist arrivals will reach up to 700,000,” says Deepak Raj Joshi, CEO of Nepal Tourism Board. According to him, NTB is trying its best to reach new markets through digital platforms, partnerships with NRNs and road shows in different destinations.

According to him, they are marketing in Gulf countries as the youth in those countries have increased interests in adventure tourism.

According to tourism entrepreneurs, one of the major challenges is the lack of clear vision and mission on the part of the government. The government must formulate, in consultation with the private sector and other players, a clear and pragmatic vision backed by a mission for the tourism industry. This must be something which should not be tweaked or changed every time the government changes, they point out.

“Our habits and past history have shown that we pull targets out of thin air. For instance, one minister wanted a million tourists but had no idea how; another wanted to re-brand but, didn’t know what a branding exercise entails,” says Pokharel. “And thus the delivery of those targets cannot be achieved because the targets have not been thought through. The intentions may have been good but we must remember that the path to hell is also littered with good intentions,” he adds.

Deepak Raj Joshi CEO, Nepal Tourism Board says “Tourism is on the right path to recovery. We expect that this year the tourist arrivals will reach up to 700,000”

“For the past 28 years Nepal Airlines Corporation (NAC) has not invested in a single aircraft. This is the root cause of the problems that we are facing at present”

“Our habits and past history have shown that we pull targets out of thin air. For instance, one minister wanted a million tourists but had no idea how”