Nepal's two days of protests inflict $177m blow on hoteliers

KATHMANDU -- Nepal's tourism industry has been thrown into turmoil by youth-led protests that erupted just as the country was preparing to welcome tens of thousands of visitors for the autumn trekking season.

The two days of deadly demonstrations that erupted earlier this month caused losses of about 25 billion Nepali rupees ($177 million), according to the Hotel Association of Nepal (HAN). The Hilton Kathmandu alone reported 8 billion rupees in damage.

International arrivals have already dropped by nearly 30% compared with last year after the U.S., U.K. and several European nations issued travel advisories urging citizens to avoid Nepal. The tourism sector contributes nearly 7% of gross domestic product and directly employs more than a million people.

The protests, sparked by a brief social media ban, quickly broadened into anger over corruption and inequality and targeted ministers, politicians and the government. Protesters also targeted luxury hotels in Kathmandu, including the Hilton Kathmandu, the Hyatt Regency and Hotel Varnavas, which cater to high-spending visitors. HAN estimates 30 hotels and resorts nationwide were affected.

The unrest followed a punishing decade for Nepal's tourism. An earthquake in 2015 destroyed half a million homes, disrupted trekking routes, reduced Kathmandu's heritage sites to rubble and halved visitor numbers. Recovery took nearly four years. Then the COVID-19 pandemic wiped out an estimated $1 billion in annual revenue. Tourist arrivals only returned to pre-pandemic levels last year, raising hopes of surpassing 1 million visitors this year. Those hopes now appear remote.

Smoke rises from the Hilton Kathmandu hotel on Sept. 10.   © Reuters

In Pokhara, a hub for trekking and adventure tourism, the damage was even more severe. At Hotel Sarowar, the city's tallest building, protesters doused corridors with gasoline and set the 10-story property ablaze on Sept. 9. "We lost everything," said owner Bharat Mani Pahari, who put his losses at around 1 billion rupees.

Nearly 100 international guests, including participants in a volleyball tournament, were staying there at the time. More than 140 staff helped evacuate them, but the hotel -- including its restaurants, bars and meeting halls -- was left in ruins.

Aside from the physical damage, industry leaders fear a blow to the country's reputation. "While infrastructure can be rebuilt, the brand Nepal has suffered a huge setback," HAN president Binayak Shah told Nikkei Asia. Security worries are mounting, he added, with nearly half of the 13,000 prisoners who escaped during the protests still at large.

Autumn is the peak season for treks to Everest, Annapurna and Manaslu, which are among the world's tallest mountains. Guides report mass cancellations. Birodh Burlakoti of Outfitter Nepal had a group of 12 booked, but only two women from Australia showed up in the middle of this month. Speaking from Upper Mustang, he described empty trails that would normally buzz with visitors. "Many tourists believed that once they left the cities (and entered the rural mountain areas), there would be no violence," he said. "But even though the protests were confined to Kathmandu and Pokhara, remote areas also suffered from its fallout."

Mountaineers practice walking on a ladder during a training session at Everest base camp on April 15.   © Reuters

On Friday, during the 46th World Tourism Day, Prime Minister Sushila Karki sought to reassure the industry. "Tourism must be promoted as a key pillar of the national economy," she said. "Although the tourism industry faced challenges during the Gen-Z demonstrations for good governance, recovery has already begun."

The interim government led by Karki, a former chief justice tasked with holding a general election in early March, has announced a 50% tax rebate on imported rebuilding materials and a three-month loan repayment moratorium for hotels.

Shah of HAN said Nepal can draw on its past experience of recovering from crises. "In a country like Nepal, such protests are not entirely unexpected," he said. "The positive side is that tourists themselves were not targeted and market prices have remained stable."

He added that many visitors have not canceled outright but are in "wait and see" mode.

Still, for guides like Burlakoti, the downturn is crushing. "Every time Nepal starts to rise, political instability pulls it down again," he said. "For workers like us, the cycle is exhausting. Without trekkers, there is no income."

Pahari, the Pokhara hotelier, echoed the despair. "We had 60% occupancy booked for the autumn season. In a few hours, it all vanished," he said. "We haven't even had time to process the trauma."

The article appeared in asia.nikkei