IN POKHARA

The year 2018 is shaping up to be another banner year for Pokhara—the country’s popular adventure and leisure destination—after witnessing better-than-expected tourist arrivals and hotel infrastructure boom this past year.

 With awe-inspiring views, adventure activities and food choices galore, and its place as the gateway to the popular Annapurna Base Camp (ABC) trail, the Lake City can look forward to new opportunities in the upcoming New Year, industry insiders say.

“2018 is looking very positive. It will be a new year with new hopes,” says Surya Thapaliya, manager of Nepal Tourism Board office in Pokhara.  “It can be a productive year for the tourism industry as Pokhara has been attracting a lot of investors.” According to him, with the new found enthusiasm and the projected stability following the elections, more than 500 hotel rooms are expected to be added in 2018.

These booming hotel number means that Pokhara will have the capacity to accomodate at least a million visitors, domestic and international, in 2018. There are no official records of the visitors but hotel occupancy rate throughout the year show that arrivals hovered around 700,000 individuals, if domestic visitors are taken into account, says Thapaliya.

This year, the poor condition of the Narayanghat-Mugling highway also proved to be a blessing in disguise for Pokhara, according to entrepreneurs. Many tourists were forced to cancel their plans for Chitwan and re-route to Pokhara instead.

Tourism industry insiders, however, are most buoyed by the prospect of the Lake City having its own international airport within next three years which could propel Pokhara as one of the most sought after honeymoon destinations in the world. But more importantly, in a federal government system, which divides up power between national and local governments, Pokhara could establish itself as an independent destination that doesn’t depend on Kathmandu, says Thapaliya.

A city reborn

The tourism sector in Pokhara plunged into a crisis when hotel occupancy rates dipped to less than 30 percent in 2015, following the twin disasters of a devastating earthquake and a crippling trade embargo. Hotels hadn’t faced such hard times since the Maoist conflict (1996-2006).

But in 2016, there was a positive change as domestic adventure seekers started arriving in Pokhara in droves. After the earthquake, in an upbeat development, Nepalis have started touring the country more than ever before. These domestic tourists, industry insiders say, are the new hope for Pokhara’s tourism industry, as they have started to foray in droves to the Annapurna region as well.

It is also an indication that the spending capacity of Nepalis has increased, and that the industry can also survive on local business, without having to bank solely on international arrivals. This growth momentum kept its pace in 2017. In the last fiscal year, ending mid-July, Pokhara added more than 600 room nights, according to the Economic Activities Study Report 2016-17 released by Nepal Rastra Bank (NRB). At present, Pokhara’s hotels can accommodate more than 10,000 tourists daily. There are around 372 tourist standard hotels and lodges and many more are in the making.

“An additional 500 rooms will be added within next six months,” says Bharat Raj Parajuli, immediate past president of Hotel Association of Nepal, Pokhara.  “Pokhara’s hotels and lodges observed 95 percent occupancy during October. It was indeed a remarkable year.” Pokhara’s hotels hadn’t seen their rooms this full since 2014.

Furthermore, with hotels and resorts reaching a saturation point at Pokhara’s popular Lakeside, tourism entrepreneurs have been casting their eyes towards the valley rim as possible sites for their new ventures.

Budget destination

As a testament to Pokhara’s growing mileage as a preferred travel destination, popular American magazine Forbes had listed Pokhara as the cheapest city in the world to travel to. In 2016, the magazine published a list entitled “The 20 Best Value Cities for Budget Travelers”, and Pokhara was placed at the very top. The report showed tourists can travel to the Lake City on as little as $15.84 per day.

Throughout 2017, the room tariff on average (of all segments ranging from one to three stars) for foreigners were at Rs 4,000 per night, says Ganesh Bahadur Thapa, director of Hotel Snowland.  The tariff is close to the level of 2011, when the country had announced Nepal Tourism Year.

While guests are returning to hotels in droves, it is disappointing that average tariff is still at a “lower” side of the scale, says Thapa.  “This is why we are the cheapest city in the world to travel to.”

 “As Pokhara entered a new phase of hotel boom after the Maoist insurgency, hoteliers also responded to the boom with unfair competition,” says Suraj Khanal, director of sales and marketing at Atithi Resort & Spa. “Many hotels started offering accommodation at significantly low costs,” he says, “Although, they invested in a sector that delivers returns in the long term, the new players looked for short returns.”

This raises the question: Is it time for Pokhara to think about rebranding itself?

According to hoteliers, low-end tourism has been conversely impacting employment trends in the city as well. “The hospitality industry in Pokhara may have generated huge employment opportunities, but it’s not been so good for employees,” says Thapa, “The average salaries at most hotels and lodges are Rs 10,000. In Pokhara, this salary range is not sufficient to support a good quality of life.”

The impact of budget package in Pokhara also has other spillover effects. The famous ABC trek, which begins from Pokhara, for instance, has not been able to realise the full benefits of tourism. Hundreds of tourists flock to the picturesque route each year, but the community and the locals have not been able to reap the rewards from the windfall.

Trekkers, both foreign and Nepalis, are willing to spend more than they are currently, but an ill-developed business strategy—other than poor services provided to the visitors—has meant that the boom in the number of arrivals has not helped the people along the trail prosper.

But, there are some silver linings. Khanal says a bevy of luxury hotel chains are poised to enter Pokhara’s market soon. “It will obviously exert pressure on the old players to improve their facilities and charge what Pokhara really deserves,” he says.

Will Pokhara’s economic landscape change?

Furthermore, Pokhara’s four-decade-old dream of building an international airport in their city will be realised by 2021 as the construction on the project has begun this year. The construction of Pokhara International Airport commenced in August, with the completion date set for July 10, 2021. The government signed a $215.96 million soft loan agreement with China EXIM Bank in March 2016 for the project.

The proposed airport will be housed at Chinne Danda, some three kilometres to the east of the existing domestic airport. As per the feasibility report, the airport’s runway will be 2,500 metres long and 45 metres wide. It will accommodate medium category jets like the Boeing 757 and the Airbus 320. Already, Buddha Air has officially announced it will be operating international flights from Pokhara using Airbus A320 aircraft after the new airport is completed.

The construction of the airport has encouraged many investors to announce the launch of luxury hotels in the near future. Some have even already started construction. The Soaltee Crowne Plaza plans to open a luxury resort in Pokhara and has procured land at Khapaundi. Chaudhary Group (CG) Holdings has also announced the construction of an 80-room luxury five-star hotel in Sarangkot, Pokhara. Similarly, Everest Hospitality and Hotels, that has been constructing a 235-room five-star deluxe hotel in Naxal, plans to launch its next venture in Pokhara, which will also be managed by Marriott.

But before that, travel trade entrepreneurs need to ensure some basic infrastructure like public toilets and break the transportation ‘syndicate’ that has been plaguing the region’s growth. If proper steps are taken to incubate Pokhara’s fledgling tourism industry, insiders say, the Lake City is primed to claim its spot as not just the best budget destination, but indeed one that is able to accommodate travelers of all needs and aspiration in 2018.