The impact of the pandemic on the hospitality and tourism sector, and its recovery

Impact of the pandemic on Nepal 

The hospitality industry suffered significant losses during the pandemic. The highly anticipated government campaign, “Visit Nepal 2020” had to be completely called off. The campaign aimed to draw 2 million foreign visitors during the year, but COVID-19 disrupted everything. Nepal is an ideal destination for trekking, adventure tourism, wildlife and culture. Therefore, an equivalent of 8-percent of Nepal’s GDP comes from tourism, and the hospitality sector is heavily dependent on it.

According to a paper from the Journal of Tourism and adventure, the Nepalese economy had suffered a preliminary loss of 14.37% as travel had been restricted around the world. According to the Nepal tourism statistics, 2020, Nepal hosted 230,085 tourists in 2020, a drop of more than 80 percent compared to 1,197,191 in 2019. Among many sectors that were terribly affected, the tourism and hospitality sectors were the sectors that had been hit the hardest.

Impact on the hospitality sector

Although the COVID-19 restrictions have eased, it is still struggling to recover the huge losses it had suffered. The country’s luxury hotels had suffered its highest ever losses in the last fiscal year that ended mid-July. Three esteemed hotels of Nepal – Annapurna Hotel, the Malla Hotel and the Shangrila Hotel had to shut as they had incurred massive losses. However, some hotels have utilized this as an opportunity to renovate and reconstruct their services and infrastructure to be able to compete with the upcoming modern luxury hotels. The Radisson Hotel, Kathmandu suffered the highest losses as the property was closed for a year. According to the hotel’s financial report, the disruptions resulted in a net loss of NPR 260.47 million in the last fiscal year and the hotel’s net profit plunged by 489 percent. Today, the hotel’s daily average occupancy hovers around 20 percent.

The Recovery

In the first 11 months of 2021, around 126,000 tourists visited Nepal. During November, approximately 26,487 tourists visited Nepal, the largest number of tourists since the pandemic began. During October, 26,135 tourists visited, a big jump from the 9,898 tourists that had visited during September. The numbers are still low; however, the signs are encouraging. The number of tourists has been on a gradual rise as quarantine is not required for fully vaccinated tourists and the visa on arrival is reinstated for vaccinated tourists or the ones with a negative PCR test.

The Bounce Back

The pandemic has prompted many investors to pull back from investing in the hotel industry. However, despite the challenging times, hoteliers see huge potential of a bounce back for the Nepalese hospitality industry. The impressive rate of growth in tourist arrivals in the recent years, especially in the business travel category, coupled with the high occupancy rates for 5-star hotels in Nepal signal opportunities for investment in this sector. The construction of many luxury hotels in different parts of the country has seen progress. Investors of new hotel projects are trying to take an early lead in market competition as normalcy has resumed. Due to the pandemic, there have been major construction delays raising the cost of projects, but the construction has resumed.

New International Hotel Brands in Nepal

Several new luxury hotels are under construction hoping to open soon and several have recently opened. More international hotel chains have started to arrive in Nepal. Marriott, Aloft, Ramada and Hyatt Place have opened in recent years, while several of the big hotel chains have hotels under construction. Sheraton, Double tree by Hilton, Lemon tree hotel, Le Meridien, Dusit Thani resort and Holiday inn are some of the major brands of hotels currently under construction.

Casino Hospitality Trend

Lately, investors have been drawn to casino tourism. Numerous luxury hotels with casinos have opened in the cities near the Indian border.

Since casinos are banned in all but 3 states (Goa, Sikkim, Daman) in India, Nepal is an accessible option for Indians who want to gamble in casinos.

There are 5-star hotels with casinos opening near the Indian border in places such as Bhairahawa, Nepalgunj, Lumbini and Birtamode. Hotel Mechi Crown and Hotel Kingsbury, a new 5-star hotels have opened in Jhapa near the Kakarvitta border. Hotel Tiger Palace, a 5-star property has recently opened in Bhairahawa. Soaltee Westend has opened in Nepalgunj and Hotel Pawan Palace has opened in Lumbini. While Hotel Centurion, another 5-star property with a casino is currently under construction in Biratnagar. All these hotels are strategically built near the Indian border taking only a short drive to reach.

Government Initiatives

The government must continue to invest in tourism infrastructure and continue their efforts to help the sector hit hard by the pandemic. The government has already taken various steps. 72 firms have received refinance loans worth NPR 8.99 billion for the first 4 months of the current fiscal year. More than 55 percent of the firms were tourism related businesses. The tourism businesses received NPR 4.95 billion, which covered more than half of the issued refinance loans. The central bank has also been prioritizing the sector subsidized loans. To boost tourism between Nepal and India, the Nepal Tourism Board (NTB) and Travel Agents Association of India (TAAI) have signed an agreement for tourism promotion events, roadshows, webinars, national and regional events. Nepal-Bangladesh Tourism Promotion and B2B Exchange Program in collaboration between the Pacific Asia Travel Association (PATA) is an initiative on promoting each other’s destination through mutual tie-ups. Nepal Tourism Board (NTB) with Trekking Agencies Association of Nepal (TAAN) has signed a Memorandum of Understanding to generate 1,000 short term jobs for workers in the tourism industry. The construction of international airports at Pokhara and Bhairahawa is also ongoing, which will boost tourism in the country.


Tourism and the hospitality sector are a vital source of income and foreign currency in Nepal. Hotels create great value to the local community while providing employment opportunities. Lately, the signs of recovery have been encouraging. November welcomed the highest number of tourists in the country since the pandemic began with 26,487 tourists arriving.  The encouraging signs have prompted hotels to be optimistic about the future and the investors to continue investing in the hospitality sector.

Multiple luxury hotels have opened in Nepal with many under construction. There has been a trend of big international brands operating in Nepal and there have been luxury hotels featuring casinos opening near the Indian border.

The pandemic prompted hotels to do temperature checks, mask mandates and give more importance to sanitation. For the hospitality and tourism sector to bounce back, safety measures must continue to be followed. More international seminars, meetings, conferences and exhibitions need to take place. The country has seen many hotels being built; it will be challenging if the tourist arrival does not match the development.

The effort made by the government for the revival of our tourism and hospitality sector is encouraging. The government refinancing and subsidizing loans is a major step to prevent many tourism businesses from shutting down. Nepal has also signed agreements with neighboring countries, India and Bangladesh for promotion of tourism between the countries. The pandemic had a devastating impact on the tourism and hospitality sector. However, there are encouraging signs to be optimistic for the recovery as hotels have innovated and established mitigation strategies. As long as Nepal can contain the virus, the hospitality in Nepal should be on a good path to recovery.