Hounded by a plethora of international and domestic problems, Nepal’s prime foreign exchange earner is facing its toughest times since the country opened itself to foreign tourists five decades ago. While international tourism is showing signs of recovery after the September 11 attacks in the United States, a deterioration in the internal security situation has shattered the hopes of Nepalese tourism entrepreneurs. The optimism generated by Nepal’s successful hosting of the 11th SAARC Summit proved to be short-lived. Although the government has announced some relief measures, many entrepreneurs consider them too little and too late. Unless there is a significant improvement in the security situation, the tourism industry is likely to continue on its downward spiral.
By SANJAYA DHAKAL
“Restaurants across Thamel are facing grave difficulties,” says Tek Chandra Pokharel, a prominent tourism entrepreneur. His own restaurant, Rum Doodle, is struggling to survive. “We are finding it difficult even to bear regular costs like staff salaries.”
Tourists on trek : Unique experience
Tourists on trek : Unique experience
Hotels are doing no better. “The average occupancy rate is around 20 percent these days,” says Yogendra Shakya, executive chairman of Ace Hotels and Resorts. According to him, such low level of occupancy means that hotels are keeping tourists just to pay salaries and bills. “Hotels generally involve heavy costs in repair, maintenance and upgrading. Its carpets and decorations, for example, have to be changed and upgraded often. At present, we are unable to meet such overhead costs.”
The situation in the airlines sector is equally dismal. Many carriers have laid off employees or cut salaries. The Dutch airline Transavia recently announced it would suspend flights to Kathmandu from March because of lack of passengers.
Travel and trekking agencies are facing the same dilemma. “We are facing a lot of crises. We hope we can sail over these difficulties soon enough,” says Suman Pandey, president of the Trekking Agents Association of Nepal (TAAN).
“We are witnessing a historic decline,” says Tek Bahadur Dangi, director of tourism marketing and promotion at the Nepal Tourism Board (NTB). Such a prolonged decline is unprecedented in the Nepalese hospitality business’s five-decade history. “From 1999 onwards, it has been a continuous decline.”
Tourists in Patan : Marveling at architectural wonders
Tourists in Patan : Marveling at architectural wonders
That was the year Indian Airlines Flight 814 was hijacked from Kathmandu, which brought tremendous negative publicity for the kingdom. Ever since, problems have been erupting at uncannily regular intervals, sending the industry on a free fall.
The already plummeting arrivals from India tumbled further after the “Hrithik Roshan episode” in December 2000. The violent protests in Kathmandu against anti-Nepal remarks attributed to the Indian actor — which he denied making — took a perceptibly anti-Indian turn. This kept Indian tourists away. Adding to the woes were strikes in hotels. Most hotel owners closed down their establishments for a couple of days, refusing to bow to employees’ demands.
The year 2001 broke all records in terms of problems. The tragic June 1 palace killings, a flare-up in Maoist violence, the September 11 terrorist attacks in the United States and the imposition of the state of emergency dwarfed all previous problems.
Although 2002 started on a positive note — the country successfully hosted the 11th SAARC Summit and the United States eased its travel restriction following the fruitful visit by Secretary of State Colin Powell — the upsurge in Maoist violence could undo everything.
Figures released by the NTB amplify how seriously this series of sad events has battered the tourism industry. Tourist arrivals by air in January 2002 have shown a continued decline. Compared to the same month last year, the total number of tourists decreased by 47.59 percent in January 2002. Third-country tourist arrivals were 9,559, compared to 20,611 last year, a sharp decrease of 53.62 percent. The Indian tourist component alone has decreased by 24.12 percent. Besides, arrivals from the United States, United Kingdom and Japan have come down by 60.2 percent, 45.4 percent and 62.8 percent respectively.
The total number of arrivals by air in 2001 decreased by 20.73 percent to 298,456 visitors, representing a loss of 78,047 visitors. The figures indicate that third-country visitors declined by 16.52 percent and Indians by 33.04 percent during the period.
Tourists at TIA : Lured by scenic beauties
Tourists at TIA : Lured by scenic beauties
Pradeep Raj Pandey, chief executive officer of the NTB, releasing the data on January 1, said, “Just as our efforts were beginning to show positive results in arrivals during the first five months of 2001, a series of unpredictable incidents at home and abroad marred the arrival scenario in Nepal.”
“The September 11 terrorist attacks aggravated a global economy that was already in decline and the tourism industry throughout the world had to face a downturn. Nepal is no exception,” he added. “Tourist arrivals in Nepal were quite satisfactory up until the second quarter of 2001. During the first quarter, arrivals were up by 15.73 percent. And in the second quarter, they were down by 16 percent. The decrease in the second quarter was largely a result of drastic decline in June, which was considered to be short term. However, the performance of the third quarter was discouraging, showing a further decline by 28 percent. This decline continued sharply until the fourth quarter.”
Multiplier Effect
Tourism is one of the few industries where the trickle-down effect is quite apparent. A single hotel can result in a chain effect. “While tourists come and stay in hotels, the employees may want to stay and eat outside. So it triggers investment in small restaurants, lodges and whole lot of other facilities around the hotel,” says Shakya. Besides, from vegetable vendors to florists, and from plumbers to guides, many people get jobs. The multiplier and chain effect of the decline in tourism is beginning to be felt. As hundreds of thousands of people, directly or indirectly, depend on this sector for their livelihood, its cost on the national economy is significant.
Shakya says this is the reason why the government, which was not too keen on tourism, is stirring up to address the problems of the sector. “They now realize the importance of tourism on the national economy.”
A slump in tourism will not only affect a five-star hotelier but also small-time vendors in as far-off places as Beni or Mustang. “I read some article that even beggars are not getting money these days,” says Shakya.
According to the World Tourism Organization (WTO), 10 people get jobs if one tourist comes to a country. This equation can have a dramatic effect on any country’s economy. For a country like Nepal, which has next to non-existent export industries, tourism offers tremendous potentials. “But it all boils down to one thing. Unless we have our own house in order, no tourist is going to come here,” says Pokharel.
Government’s Relief Package
The government recently came up with various policy decisions to reinvigorate the industry. The package includes a waiver of royalty for foreign documentary production, the opening up of restricted areas in six districts to foreigners, and exemption of visa fees for a limited time, among other things. The government has also introduced a single-window policy to issue license for those interested in filming the country’s scenic wonders. A producer will be granted permission from the Ministry of Information and Communication, doing away with the previous cumbersome process of having to go through several agencies.
Royalty for filming a documentary at Upper Dolpa and Upper Mustang has been reduced to $5,000 from $40,000. In response to demands from tourism entrepreneurs, the government has opened up restricted areas like Limi, Byas, Olangchungola, Nangpala, Kimathanka and Kandadhuli to tourists. The government has also decided to waive visa fees for visitors who stay for one day in Nepal from January 1 to July 15. The existing three visa groups have been reduced to the single- and multiple-entry categories.
The charge of single-entry visa has been fixed at $30, which would be valid for 30 days. The fee for a multiple-entry visa, valid for five months, has been fixed at $50. The government opened 103 new Himalayan peaks to mountaineering, taking the total number of such peaks to 263.
Climbers on peaks under 6,500 metres will no longer require liaison officer with effect from upcoming spring season (March 1, 2002). The services of liaison officers will not be required on 89 peaks.
Besides, the government has decided to exempt royalty for ascending certain peaks. It recently announced partial and total exemption of royalty on 60 peaks. The announcements were made with a view to promoting the trekking and mountaineering sector in connection with the Destination Nepal Year 2002-2003, the golden jubilee celebrations of the successful ascent of Mt. Everest and International Mountaineering Tourism Year, 2002.
Although tourism entrepreneurs have welcomed these steps, they say it is too little and too late. “Such decisions should have been taken long ago, and in normal circumstances,” says Pokharel. Pandey says that the new moves would help the trekking and mountaineering sector.
Addressing a program organized by TAAN to mark Lhosar festival recently, Minister for Tourism, Culture and Civil Aviation Bal Bahadur KC said, “The government is ready to help this sector in any way it can. I urge entrepreneurs to come forward with suggestions.”
China Enlists Nepal, India Relaxes ID Procedure
Recent decisions by Nepal’s northern and southern neighbors could go a long way in boosting the sagging morale of the country’s tourism sector. By allowing Indians under 18 years of age traveling to Nepal by air to do so on the basis of their school ID, the Indian government has removed a key barrier that has existed since 2000. After the Indian Airlines hijacking, the Indian government made it mandatory for its citizens to produce ID cards like passport, voters’ card or ration card when coming to Nepal by air.
“Indians travel in a family and if their kids can’t come, parents would cancel the trip. Now this decision will resolve this problem,” says Dangi. Entrepreneurs say Indians spend more than other tourists do. As Nepal’s closest neighbors, Indian tourists will always play a major role.
Last year, China enlisted Nepal as an out-bound destination for its citizens. China is one of emerging global economic powers and last year 10 million of its people went for overseas travel. Tapping even a small section of the Chinese market can revive the whole tourism sector of Nepal.
The Nepalese and Chinese governments recently signed a memorandum of understanding (MoU) on the implementation plan for outbound travel by Chinese citizens to the kingdom. The MoU has provisions regarding visit programs and procedures for Chinese tourists. As per the agreement, the Chinese tourists have to visit Nepal in groups comprising at least five individuals through travel agencies recognized by the two governments.
Beijing has granted recognition to 67 travel agencies for managing tours of Chinese nationals. The Nepalese government would also recognize the same number of travel agencies for handling Chinese groups. But entrepreneurs say the Nepalese side needs to do its homework better in order to profit from the Chinese decisions. “The ball is in our court now and we must be prepared to handle Chinese tourists to maximum benefit,” says Shakya.
The government has also decided to celebrate Destination Nepal Year 2002-2003, International Year of Mountains 2002, and Golden Jubilee Celebration Year of the successful ascent of Mount Everest 2003. The main objective of these events is to help Nepal develop its image by showcasing premier events, especially in the mountain tourism sector.
But unless we put our house in order, no tourist will come, no matter what attractions we offer. “Until and unless the security situation improves, all our efforts could go in vain,” says Dangi, a sentiment shared by Pokharel and Shakya. The revival of Nepal’s tourism industry, therefore, would depend on its success in restoring peace and security.
‘We Don’t Know How To Capitalize On Good Things’
— Yogendra Shakya
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Yogendra Shakya is one of the prominent tourism entrepreneurs of the country. Executive Chairman of Ace Hotels and Resorts, owner of hotels like Ambassador and Club Himalaya Resort, Shakya spoke to SANJAYA DHAKAL about the present situation in the tourism industry in the country. Excerpts:
How do you assess the current depressing scenario in the tourism sector?
In my entire 30-year career, I have never felt the sector reaching so low. We were already suffering from over-supply even when the tourism figures were good in 1999. Then, the average occupancy rate of our hotels was only 40 percent. I am talking from the point of view of hotels. Our hotels can cater to almost 1.2 million tourist, whereas we had just over 400,000 tourists in 1999, which was considered a good year for tourism. The year 2000 witnessed about 13-14 percent fewer visitors than 1999. And in 2001, arrivals came down further by 20-24 percent. So, just imagine the average occupancy rate in hotels today. They have come down to around 20 percent. Such low occupancy is not going to service even our costs. Hotels are just keeping tourists to pay salaries and bills.
The government recently opened up a few more peaks and relaxed visa and other regulations as part of a package to stimulate tourism. How has the industry received this?
I know that the government is showing signs of concerns. We have always been telling the government to be open-minded about helping tourism because we are competing with the most developed countries. So, we always have to act and behave fast. Everybody is eyeing tourism. Our decision-making has been very slow. But I think with this decline, not only the government but also the common man understands how important this sector is. Now they realize when tourists don’t come, it is not only hotels or trekking agencies but the whole country that suffers. I read some article that even beggars are not getting money these days. Because they are concerned, the government recently introduced the relief package. However, these measures are not medicines, but merely pain-killers. The whole tourism sector will have to get together and develop products that include roads and infrastructure. We have make our tourism products more exciting, be it sight-seeing, rafting or anything else.
The Indian government has decided to relax its ID requirement for citizens below 18 years of age traveling by air to Nepal. How would this affect tourism?
With the past rules, it was very difficult for children up to 18 years of age to travel by air to Nepal because they don’t have voters’ ID, or citizenship or ration card. I hear that the home secretaries have agreed to allow them to travel by their school IDs, too. This is a very welcome step and I hope this new rule is implemented quickly. We get many families coming from India and unless their children can come, the parent will not. Indian tourists will always play a major role in our country, because they are right next to us. We also need to develop surface routes to lure more tourists from India. We could develop attractive packages for tourists coming by land from, say, Delhi or Mumbai. Maybe we should have our own Everest Express train to cater to them. We should talk with the Indian government to come up with such packages. It will also be a very nice gesture on the part of the Indian government.
How will the tourism sector benefit by the opening up of Nepal to Chinese tourists?
I think we have to do our homework more than the Chinese. We were the ninth country to have signed a memorandum of understanding with the Chinese government. But follow-up on our part was slow. That is why we are already 27th in the list of out-bound destinations for Chinese. Others have come and already gone into action. It seems we have missed the bus because now Chinese tourists have a variety of choices for travel. If we don’t complete our homework, work out the details, the charm of signing the MoU as the ninth country will fade away. Also, among Asians, there is this mentality of traveling to America and European countries. We have to make our packages interesting to lure the Chinese.
What kind of marketing do we need in the international sector?
Our biggest problem in marketing is that we have not been able to go to the actual consumers. We have always been trying to convince the middlemen, i.e., travel and tour operators. Of course, it is important to convince the middlemen, but they can only work so much. The consumer has to be excited. It is easier said than done because to go to consumers, we have to go on massive advertisement through the international media, which we cannot afford. The only way we can reach the consumers is to try and get international newspapers write on different subjects like Kumari, Gurkhas and Mt. Everest and peg ourselves with these subjects. Article like Honey Hunters of Nepal and films like Caravan and Everest Imax go a long way in enticing consumers. Through gimmicks, we can put ourselves on the minds of consumers. Recently, there was a write-up in Time magazine about Nagarkot. They even mentioned the Club Himalaya, which was fantastic publicity for us. One thing I don’t understand is that, while we made such a lot of noise when Newsweek once wrote “Bye, Bye Shangrila,” there was silence regarding the Time article. We need to highlight our positive aspects more often. We don’t know how to capitalize on good things but are very sadistic talking about bad ones.
How is the Nepal Tourism Board (NTB) promoting the country overseas?
I myself am a member of NTB. With the NTB, the concept was to place the private sector in the lead. It is a pattern followed in Singapore and Thailand, as well. It is a concept where tourism self-finances its promotion by getting certain income from tourism. In a poor country like Nepal, we cannot expect the government to spend millions in promotional activities. They will always have roads or other development projects on their priority list. The reason why the board took a lot of criticism initially was its PR problem more than anything else. Now, we are gradually making efforts to be more interactive with the private sector. In fact, now for all our promotion purposes, there is a team of private sector representatives who make the marketing plan. The approach is more focused now in order to make optimal use of limited funds.
‘Tourism Is Very Sensitive To What Is Happening’
—Tek Chandra Pokharel
Tek Chandra Pokharel is a prominent tourism entrepreneur who is involved in such sectors of the industry as hotels and travel/trekking agencies. Pokharel spoke to SANJAYA DHAKAL on major issues confronting Nepal’s tourism industry. Excerpts:
What is the present mood of tourism entrepreneurs?
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The mood is quite despondent. After the September 11 incident, there was a dramatic drop in tourist arrivals. By November, it was picking up. However, as soon as the emergency was declared, there was a dramatic drop again. Right now, there are signs of tourism having picked up again, but it is very sensitive to what is happening in the country, especially when armed violence is taking place. There seems to be grave doubts about the success of the government in resolving the problem. Political parties are fighting among themselves even in this situation. In this scenario, I do not know what role the tourism industry can play to sustain the sector. We cannot control politics or urge politicians to resolve problems through dialogue. Taking up arms to bring about change in the country is not good. At the same, fighting insurrection with arms alone would not be successful. Dialogue is necessary. This is where the future of tourism and other industries of the country lie. We are currently living in a situation that is not of our creation.
How do you see the government’s recent attempts to revive the sector?
Those were steps that ought to have been taken long, long before — and in normal circumstance. They are welcome, but merely opening a few more peaks, reducing visa fees and filming charge will not help now. For example, we could have lured Bollywood here after the militancy flared up in Kashmir. But our government increased royalty and film producers moved to Switzerland where cities competed among each other to attract them by offering lucrative packages. In here, we drove away whoever might have come.
How can we lure back Indian tourists?
It is going to take a lot of time to recover Indian tourists. Unlike before, Indians now have access to foreign exchange and it cheaper for them to go to Bangkok than Kathmandu. Only RNAC and Indian Airlines flights are available. Indian Airlines is simply not interested to reduce its airfare to promote Kathmandu. We have to do a lot to lure them back. In fact, it makes better sense to start marketing our tourism products in bordering Indian towns like Gorakhpur and Varanasi, which we have neglected before.
What about tapping the Chinese market?
The Chinese government decides what number of Chinese can come here. It is done, no problem. China is going to be one of the biggest markets in the global tourism market. We must start cultivating them right now. The Chinese market is going to be beneficial in the long run. But others have had problems, as Chinese tour operators are known for taking most of the profits back with them. Complaints like these had come from places like Hong Kong, Thailand and Japan. Anyway, we have to be ready to prevent it from happening here. Many of our tour operators have the experience of handling tourists from Taiwan. They may be able to utilize that experience now.
What should be our marketing strategy in the international arena?
Different strategies should be adopted for different countries. For India, a lot of marketing needs to be geared toward cities adjoining the border, like Gorakhpur, Lucknow, Patna, Siliguri and Varanasi. At the same time, we should not leave out our original market, which we have lost, and try to recover them. It has been our experience that Indian tourists spend more money than, say, Europeans or others. They were profitable for our hotels and even marketplaces like Bishal Bazaar. As for the Chinese, we need to find out what they want. Those with experience handling tourists from Taiwan, for the last 20 years, can help in this. Tourists from Taiwan, too, were not profitable initially. Now they have more foreign exchange at their disposal. Earlier, some of them used to bring cameras and watches, sold them here and used the money for traveling. Above all, we need peace in the country to lure tourists. We are still keeping our fingers crossed that the problems will be solved amicably. Our economy cannot sustain the cost of war. All our development efforts will vanish and we will be back to where we were 50 years ago. Political leaders need to think of the country before their personal ambition. It is very painful to tell leaders these things. It should have been the other way round.
‘We Are Facing A Historic Decline In Tourist Arrivals’
— Tek Bahadur Dangi
Tek Bahadur Dangi is the Director of Tourism Marketing and Promotion at the Nepal Tourism Board (NTB). A person with vast experience in Nepal’s travel trade, Dangi spoke to SANJAYA DHAKAL on the current state of the sector. Excerpts:
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How do you assess the present situation of the tourism sector?
Due to many national and international reasons, the sector is not doing quite well this time compared to previous years or previous seasons. So, tourism entrepreneurs are not too enthusiastic. But they are not too pessimistic either. They have very good prospects. Yes, presently they are facing problems. Tourism is declining even in the international sector after the September 11 incident. In addition, Nepal is facing many domestic problems, which definitely has not helped the country’s image. Thus, we are having low arrivals of tourists, resulting in many difficulties for entrepreneurs.
What is the extent of the decline?
Well, it has come down by around 22 percent compared to last year. In Nepalese tourism, it is a historic decline as it is a continuous decline for the subsequent years. There was a decline in 2000 and again in 2001. International tourism is also facing a decline but it is more here because we have had so many domestic problems. But again, there is a projection that international tourism will pick up beginning mid-2002. Therefore, if we get things better at home, we can have good progress.
The government has made moves to reinvigorate the sector by relaxing visa fees and opening up a few more peaks. How would these measures affect the industry?
The government has taken a lot of decisions that would have immediate and long-term impact on tourism. For example, new trekking and mountaineering areas have been opened, filming fees have been reduced, visa fees have been simplified and some royalties on mountaineering have been reduced and waived. All this will definitely create an immediate impact, as it provides new incentives. The government has very recently declared the Destination Nepal Campaign (DNC), which is meant for at least five years. Within this campaign, there will be collective efforts by the government and the private sector in product development and international marketing.
How is the NTB working to lure Indian tourists?
After the recent decision by the Indian government to relax the requirement of ID for under-18 tourists, a barrier has been overcome. Basically, Indians travel in a family to Nepal and if their kids face difficulties, the whole trip is cancelled. Therefore, the recent decision is going to make an important impact here. The DNC marketing mission will also create positive impact. We are trying to promote Maha Shivaratri festival this year. Recently, the board went on a marketing mission to southern Indian cities.
How can we attract Chinese tourists?
China’s acceptance of Nepal as out-bound destination for its citizens is going to have a long-term impact. Last year, 10 million Chinese tourists traveled abroad. According to the World Tourism Organization (WTO), China will be the fourth largest out-bound market in the world by 2020. In that scenario, Nepal being a neighboring country with so many unique tourist attractions like mountain flights, white-water rafting and jungle safari, we have a lot of potentials to lure them. If we make an integrated approach in terms of marketing and accessibility, we stand a good chance of benefiting a lot. The board participated in tourism fair CITM in Kunming in October last year and we have invited three, four journalist groups from China. We have also invited China’s central TV for a familiarization trip in March. Besides, we are also planning a chain of activities to promote tourism in China. In terms of catering to their taste, we have published booklets and CD-ROMs in Chinese language. The board is also conducting training for Chinese tourist guides.
What kind of marketing strategy has the NTB developed?
We are concentrating on 12 countries categorized into three groups — primary, secondary and potential. We don’t go everywhere. In the primary category, we have five countries, India, USA, Japan, UK and Germany. In the secondary category, we have five countries, France, Spain, Italy, Netherlands and Australia. China and the Middle East fall in the potential category. We focus our attention accordingly. However, after the September 11, the travel trend has shifted in a dramatic way. There has been a huge decline in long-haul travel. People are now more interested in traveling within their region. There is still a fear of traveling by air. I think Nepal should also start focusing more on countries nearby and those with which we have direct air access, such as India, China, Hong Kong, Thailand, Singapore and Bangladesh.