Hotels resort to undercutting

- Post Report, Kathmandu

Nov 5, 2015-

As low occupancy has started to bite hotels, they have started adopting a new kind of business strategy—putting heads in beds at any cost—by offering massive discounts. Hotels have started undercutting each other.

Binayak Shah, vice-president of Hotel Association Nepal, said that price cutting had started again among hotels, and that it was harmful for the industry.

The decade-long conflict had a collateral impact on the hospitality sector. Although tourists were not harmed by the insurgents, arrivals started to decline. Even five-star rooms were available for less than $50 per night as Nepal was convulsed by a decade-long armed insurgency from 1996-2006.

The post-conflict scenario was more painful for entrepreneurs. The advent of militant labour forced a number of star hotels to shut down as the hospitality sector faced the brunt of labour unrest. 

This led to Nepal’s becoming known among the world’s cheapest destinations. The Travel and Tourism Competitiveness Report 2013, published by the World Economic Forum, had revealed that Nepal offered the most competitive hotel prices in the world after Gambia. The average room tariff in Nepal was reported to be $52.70. 

However, hotels started to increase their tariff gradually after 2011, when demand started to surpass supply. The average tariff of five-star hotels in Nepal presently stands at $100 per night.

Published: 05-11-2015 08:48

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