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Most Nepali luxury hoteliers have returned to profitability, driven by a resurgence in tourist arrivals after the coronavirus pandemic.
Soaltee Hotel’s net profit in the first half of the current fiscal year ended in mid-January was Rs 263 million, according to a second-quarter company analysis report released by the Nepal Stock Exchange.
The report shows that Soaltee’s net profit increased by 6.64% year-on-year.
In terms of revenue, the hotel earned a record Rs 105 crore during the review period, registering a growth of 9.44%.
The hotel said in its analysis that strong growth in visitor numbers between September and November helped increase revenue. “Tourists from India and China have increased significantly,” it said. “Arrival numbers indicate that tourism is returning to pre-COVID levels.”
Nepal welcomed over 1 million tourists between January and December 2023 after China reopened its borders and record number of tourists from India.
Arrivals crossed the million mark for the first time in four years, according to the Nepal Tourism Board, the country’s tourism promotion agency.
This is the third time that Nepal has received more than one million tourists.
The increase in tourist arrivals has cheered the Pushpa Kamal Dahal-led government at a time when other economic indicators are poor and the country is witnessing mass migration due to a lack of decent employment opportunities in the country.
In 2018, the number of inbound tourists exceeded one million for the first time, with 1.17 million foreign tourists pouring into the country.
In 2019, this number rose slightly to 1.19 million as flight connections to several cities in China improved.
Then, the COVID-19 pandemic broke out in early 2020, bringing incoming travelers to a standstill.
Taragaon Regency Hotels Ltd also recorded double-digit revenue growth in the first six months of the financial year. During the period under review, its revenue grew by 14.39% to Rs 714.21 million.
The company, which owns luxury five-star hotels in Kathmandu under the Hyatt Regency brand, said in its financial statements that net profit rose 71% to Rs 181.62 million during the period under review.
“Nepal’s tourism industry is gradually recovering,” the hotel said in the report.However, it said quality tourism still faces challenges despite fierce competition in the hotel industry due to the rise of five-star hotels [those spending higher] and has not increased. “
According to statistics from the Ministry of Tourism, there are 18 five-star hotels in the country. Nearly a dozen five-star hotels are under preparation.
The Kingsbury Hotel in Jhapa, Soaltee Westend Premier Hotel in Nepalgunj, Hotel Central Plaza in Kohalpur, Hotel Ichchha in Simara, Hotel Lhasa International in Lazimpat, Akama Hotel in Dhumbarahi have been awarded five-star status by the department.
Basanta Raj MishraThe chairman of Temple Tiger Group said luxury hotels were doing exceptionally well thanks to marketing efforts overseas. One million tourists is a good number, but it is not enough to fill all hotels.
“Our observations show that the occupancy rate in Kathmandu is 40%, while outside Kathmandu it is 26%,” he said. “However, luxury or five-star hotels that market themselves aggressively have unusually high occupancy rates.”
Mishra said the growth in hotel numbers was better than expected as arrivals remained low.
“We need at least 2.5 million visitors a year, which will ensure 65 per cent occupancy in all hotels.”
“For this, the government’s existing policy interventions are not enough. We need to increase air connectivity and make the new airports in Pokhara and Bhairahawa fully operational to achieve tourist numbers and ensure equitable distribution of tourists in hotels across the country . ”
In recent years, a large number of hotels have opened outside the Kathmandu Valley.
Hotel Mechi Crown in Jhapa has been awarded five-star luxury hotel status, the first luxury hotel in the country.
Industry insiders said that although the revenue of five-star hotels has grown significantly, the business of other hotels has not achieved the expected growth.
Oriental Hotel Co., Ltd., another five-star hotel listed on the Nepal Stock Exchange, recorded revenue growth of 24.61% in the first half of this fiscal year, reaching 560 million rupees.
In its analysis, the hotel said geopolitical risks such as wars and military-related tensions around the world could impact visitor numbers and demand. Hoteliers say Israel’s conflict with Hamas and Russia’s war in Ukraine could affect attendance.
The company, which operates the five-star Radisson Blu Hotel in Kathmandu, said in its financial statements that its net profit increased 46.24% year-on-year to 53.48 million rupees.
Newly listed Chandragiri Hills Limited’s total revenue grew 12% to Rs 40 crore during the period under review.
The resort said in its financial statements that net profit rose 22% to 62.84 million rupees in the second quarter.
“Visitor numbers have picked up significantly,” the resort said in its analysis. The resort is concerned that political and policy instability could affect tourism growth.
However, another five-star hotel, City Hotels Limited, posted a net loss despite healthy growth in total profits.
In the second quarter of this fiscal year, total hotel revenue increased by 24.98% to 278.51 million rupees. Net profit in the second quarter plummeted 10.93% to 117.99 million rupees.
The City Hotel under Hyatt Place opens on November 15, 2021.
The hotel said it plans to upgrade to a Hyatt Centric starting in the first quarter of the next fiscal year.
The report cited the ongoing economic slowdown, high interest rates and the imposition of a luxury tax on hotels as key challenges.
COVID-19-induced travel restrictions and economic slowdown have hit Nepal’s luxury hotels hard, with revenue and profits falling sharply since 2020.
The government imposed a lockdown on March 24, 2020, which lasted until July 21 of that year. Although hotels are allowed to operate under health safety protocols, visitor numbers have hit rock bottom. All meetings have been restricted, resulting in their complete closure.
On September 23, 2022, Nepal lifted its seven-day quarantine requirement, eased travel restrictions and began issuing visas on arrival to all vaccinated foreign travelers in a bid to revive its virus-ravaged tourism industry.
Hoteliers said the Yeti Airlines plane crash in January 2023 dealt a brief blow to tourist flows. After flights to Kathmandu from different cities in China were resumed in March, arrivals surged.
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