As soon as Shesh Ghale, the president of Non-Resident Nepalese Association and one of the richest non-resident Nepalis in Australia, announced his plan to construct a new five-star hotel in Kathmandu, the Pokhara-based Laxmi Group and the Hetauda-based Mukti Shree Pvt Ltd followed in his footsteps.
With billions of dollars investment pouring into the sector in the next couple of years, travel and tourism seems set to resurrect to its former position as the largest foreign currency earner in the country. However, travel and trade entrepreneurs have been waiting for the government to walk the talk and start implement recommendations of a high level committee led by chief secretary Lila Mani Poudyal.
After the committee’s recommendation a year ago, the cabinet decided to accord the tourism sector a priority industry status, but the decision has not yet been implemented ‘officially’. The high level committee gave recommendations on a plethora of issues from short-term – including tax break to incentives for vehicle imports, to long-term – including easier access to land leases hotel construction and plans for the overall development of the tourism industry.
Tourism provides around two percent of the country’s employment and is the only industry that can have a spiral impact in the economy from urban to rural levels, guaranteeing greater distribution of the wealth.
From home stays that involve the rural populace directly with tourists to trekking that has been providing direct and indirect employment in various remote mountainous districts for decades, it is an industry that helps create large-scale employment with very little investment.
Though the contribution of travel and tourism to the economy is expected to grow to 8.1 percent (Rs. 182.1 billion) in 2020 – according to the World Travel and Tourism Association – the exact contribution of the industry has not yet been calculated, due to a lack of tourism satellite accounting.
The Ministry of Tourism and Civil Aviation (MoTCA) has started to collect the primary information that could in future help prepare this accounting, which can reflect the real picture of the tourism sector’s contribution to GDP.
Currently, the contribution stands at 2.5 percent, whereas it was 2.0 per cent in 2011-12 and 1.8 per cent in 2010-11, according to the ministry. But in 2009-10, tourism contributed 2.4 per cent to the economy. The industry’s contribution to GDP decreased in the last two fiscal years due to political instability. Lack of stability, security and certainty had an adverse impact, putting tourists off Nepal and on to other destinations.
But with stability, the industry is witnessing increased earnings. Nepal received Rs. 30.7 billion from the tourism sector in the fiscal year 2011-12, against Rs. 24.61 billion in 2010-11. According to the ministry, Rs. 36.6 billion was generated by the travel and tourism sector in the fiscal year 2012-13.
However, the government’s delay in implementation of the priority industry status has clipped the wings of the industry. The government needs also to implement its policy of paid leave for government employees to promote internal tourism, which has yet not been implemented, apart from the appointment of a travel attaché and establish travel information centres in Nepali diplomatic missions abroad. The missions abroad have to be mobilised in an efficient manner to promote tourism, and the development of new destinations and packages.
In the budget for the current fiscal year, the government has promised to construct regional international airports in Pokhara and Bhairahawa. The government should join hands with the private sector in the public-private-partnership model for regional airport construction.” suggests Federation of Nepalese Chamber of Commerce and Industry president Suraj Vaidya.
Likewise, with more international airlines flying to Nepal, the current infrastructure at Tribhuwan International Airport is not enough to accommodate the rising number of tourists in recent years.
Likewise, the government initiative of tourism promotion failed due to a lack of aircraft. The national flag carrier – Nepal Airlines – has not been able to expand its fleet and fly on international routes that would help promote Nepali tourism directly. The political bickering in the Nepal Airlines Corporation has crippled the national flag carrier and has resulted in its lack of flights to international routes.
The ailing airline has been forced to reduce its international routes, including the most profitable New Delhi route, but a recent agreement with a European aircraft manufacturer has ensured that Nepal will get two Airbus aircraft in the next three years.
Apart from the infrastructure, development of new packages and destinations is also key to attract tourists and lengthen their stay. The tourism industry has failed to develop new tourist destination packages as they have been selling only Pokhara, Lumbini and Chitwan for a long time. Travel and tourism entrepreneurs should also be more innovative and develop new tourist packages including the virgin West and Far West regions that have huge potential for the trekking and adventure tourism.
According to the ministry, some 48 percent of tourists visiting Nepal do so for travel and holidaymaking, around 14 percent for trekking and mountaineering, and over 13 percent of the tourists visited Nepal for pilgrimage last year.
But the failure of the government and tourism entrepreneurs in catering to the needs of visitors made Nepal see no improvement in its ranking in the Travel and Tourism Competitiveness Index 2013, published by World Economic Forum in 2011. Nepal was ranked at 112th, with a 3.42 score among 140 countries in 2013. The average length of stay for tourists has also slipped to 12.87 days in 2012, from 13.12 days in 2011, the MoCAT data revealed.
Despite prolonged political transition, tourists continue to flock to Nepal because of Mount Everest, Lumbini and its warm and welcoming populace. But with increased investments from the private sector and policy backed by the government, tourists will love Nepal all the more.
The year 2014 will see more tourists flocking to Nepal due to the successful second Constituent Assembly in November of last year, which has given a new ray of hope that the country will soon become more politically stable, which will help regain Nepal’s lost position in the global travel and tourism map.(Published in Business 360 magazine January 2014 issue)