Tourism Sector Must Be Central to Election Manifestos for Policy Reform, Says Hotel Association President

As political parties prepare their manifestos for the upcoming elections, how should the tourism sector be prioritized? We spoke with Binayak Shah, President of the Hotel Association Nepal (HAN), focusing on how policy reforms, regulation of the informal business sector, and infrastructure development should be incorporated into these manifestos.

Here is the edited excerpt from the conversation with Shah:

• How do you view the contribution of the tourism sector to the country's economy, and what kind of policies should the next government or policymakers adopt for tourism development?

When discussing the economic development of any country, tourism is a primary vehicle for prosperity. It plays a direct role in everything from job creation to increasing national income. For instance, when a tourist lands at our Tribhuvan International Airport, their spending begins right there. They pay visa fees, take taxis, eat at restaurants, and stay in hotels. This circulates money down to the lowest levels of the economy.

However, the irony is that this sensitivity is not visible at our policy-making level. Regardless of which political party forms the next government, 'tourists' must be their central focus. An environment must be created where tourists visiting Nepal can describe their experience as 'excellent.' They must receive services and satisfaction commensurate with what they spend. The state must ensure that tourists can travel freely without any hindrance or obstruction.

If we look at our current policies, regulations, or tourism acts, they are neither tourist-friendly nor business-friendly. Our laws are control-oriented. There is an excessive focus on punitive measures, such as six months imprisonment, fines, or penalties for failing to meet standards. It seems these policies are designed merely to protect government employees and operate under their discretion. This has neither made things easier for tourists nor provided security and encouragement for business investment.

Businesses feel they are only facing hardships. Therefore, future policies, regulations, and programs must center on facilitating tourists and entrepreneurs, which is currently not the case.

• On one hand, there are registered businesses paying taxes, while on the other, informal businesses are increasing. What kind of competition is this creating in the market?

This is a very serious issue right now. A huge gap has formed in our tourism market between the formal and informal sectors. We, as hotel and tourism entrepreneurs who are registered according to the Government of Nepal's policies and regulations, meet standards, and operate by paying regular taxes to the state, find ourselves competing with the informal sector.

Currently, businesses operating under the names of Bed and Breakfast (B&B), homestays, or apartments are flourishing in the alleys of Kathmandu, Patan, and Bhaktapur, and in private homes, hosting tourists. They are neither registered anywhere, nor do they pay a single rupee in tax to the state, nor do they create employment. Yet, a hotel that has made a huge investment has to compete with them.

On the other hand, the government has failed to regulate digital platforms. International cloud-based entities like 'Booking.com' handle the bookings for most hotels in Nepal and take a commission, but should they not be registered in Nepal? In other countries, there has been extensive debate and agitation to bring social media or digital platforms under the tax net, but here, the government has failed to regulate this informal sector.

Perhaps only about 300 hotels are registered with the Department of Tourism. However, according to the Central Bureau of Statistics report, there are 142,000 companies or units in the hospitality sector in Nepal. More than 10,000 hotels are operational in the country. If only 300 are registered with the department, who is regulating the rest? What is the role of the Department of Tourism? This disorganized state is harming the formal sector.

• The private sector has invested heavily in infrastructure, but tourist arrivals have not increased. How do we manage this gap between our capacity and actual arrivals?

The main topic that any election manifesto or government policy must address now is increasing tourist arrivals. Currently, our tourist arrivals are stuck around 1.2 million. Whereas, looking at the capacity and readiness of the private sector, we are in a position to serve 3.5 to 4 million tourists annually.

If we look at the 2025 statistics, about 1,147,000 tourists arrived. This means only one-third of our total capacity is being utilized. No industry or business can operate sustainably by trading only at 33 percent or one-third of its capacity. If we settle for 1.2 million tourists, billions of investments will be at risk.

Therefore, the path forward is to rise above the status quo. The tourism sector cannot advance with the old methods, old thinking, and traditional styles. Just as the new generation is seeking change in every sector, tourism also requires radical transformation. The government must be bold enough to set a target of bringing in 5 million tourists and must collaborate with the private sector for this. Infrastructure and capacity exist; only management and marketing are lacking.

• Kathmandu's airport capacity is struggling to cope, while the international airports in Pokhara and Bhairahawa, though completed, remain unused. Why has this bottleneck not been removed?

This is our irony. We built international airports in Pokhara and Bhairahawa with billions in loans. It has almost been three years since their inauguration, but these airports are currently sitting idle, like drying grains in the sun. Building infrastructure is not enough; a plan and the capacity to operate it are also necessary.

The government has made no concrete effort to operate these airports. The experience of the last three years confirms that our Civil Aviation Authority or government mechanisms have failed to run these airports. Being unable to operate even a single international flight regularly is a managerial failure.

Change is necessary here. Just as international tenders are sought for expertise to operate projects like the Thankot tunnel or other large projects, these two airports should also have been put up for international tender to operate them.

Look at India; major airports are run by private or international companies. Companies like Lufthansa had shown interest in the past, but we tried to run them by sending 'our own people' or those close to political parties, resulting in zero outcomes. Now, without further delay, there is no alternative but to bring these airports into operation under an international model, through Public-Private Partnership or management contracts.

• The condition of road infrastructure is equally dire. What impact has the years-long neglect of roads in the name of expansion had on tourism?

The condition of the roads is even more miserable. If there are no roads for Indian tourists who want to come to Nepal in their own vehicles or by bus, how will they come? The roads leading to our main tourist destinations—Pokhara, Chitwan, Lumbini—have been chaotic for years in the name of expansion.

The talk of building 4-lane or 6-lane roads sounds good, but when will they be built? A contract is for 3 years, but work isn't done even after 5 years have passed. Ministers change, someone cancels the contract, and it becomes a mess. Whether it's Mugling-Pokhara or Butwal-Narayanghat, tourists have to spend hours in dust and traffic jams. This slow pace has cut the 'lifeline' of our tourism. National pride projects moving at a tortoise's pace is equivalent to strangling tourism. If this model of infrastructure development is not immediately reformed, the path for tourists to arrive is virtually closed, no matter how much we advertise.

• Lately, there is a debate about bringing in quality tourists rather than focusing only on numbers. Is it really time for us to focus only on quality tourists?

The concept of 'quality tourist' sounds good as a slogan, but reality is spoken by statistics. A few years ago, tourists visiting Nepal spent an average of $48 per day; now, that has dropped to $41. Similarly, the average length of stay for tourists has decreased from 14 days to 12 days. Talking about quality when both spending and length of stay are decreasing is contradictory.

The problem is that after tourists arrive in Nepal, we have failed to market destinations outside of Kathmandu, Pokhara, Chitwan, and Lumbini. Although the country has moved to federalism, and more than 100 new tourist destinations have been identified in all 7 provinces, we have failed to develop the infrastructure and packaging to reach those destinations.

We cannot make tourists spend money just by showing them Kathmandu and Pokhara. We must take them to new destinations and involve them in activities. This slogan will not work unless there is a national strategy on what kind of tourism to develop in which province and how to extend their stay.

• What has been the government's role in post-Covid recovery, and what potential do you see in new sectors like MICE or sports tourism in the coming days?

The recovery of the tourism sector after Covid was entirely due to the efforts of the private sector. Hotel entrepreneurs, airlines, travel, and trekking agencies struggled from their respective ends to bring arrivals back to the level of 2019. No concrete coordinating role from the government was visible in this.

The 'Tourism Decade' was announced, but even as 2025 approaches, it has not been effectively implemented. There is a lack of a national strategy and program connecting the three tiers of government and the private sector. The Tourism Board has been limited to setting up stalls abroad and general promotion.

The potential now lies in moving beyond traditional tourism to identify new sectors. Nepal has huge potential in MICE tourism, 'wellness,' and spiritual tourism. Furthermore, the recently concluded Nepal Premier League has opened the door for 'sports tourism.'

For example, regarding cricket, in a situation where India is unwilling to go to Pakistan and Pakistan is unwilling to come to India, Nepal (Kathmandu) can serve as an excellent neutral venue. We have grounds like Kirtipur and Mulpani, and we have developed the capacity to host matches at night. Imagine how many tourists would come if just one match between India and Pakistan could be held in Kathmandu? Hotels and airlines would be fully booked. This requires sports diplomacy and new thinking.

If we aim for 5 million tourists, we must move forward by creating a clear roadmap from 2082 to 2087 BS, improving infrastructure, and promoting new products (such as sports and conferences). Tourism cannot function in the old style anymore.