Foreign Investment in Tourism: What Is Open, Capped and Closed
Hotels and resorts are open to foreign capital. Travel and trekking agencies, guiding and homestays are reserved for Nepali investors.
An international hotel group, an inbound tour operator and a homestay platform will get three different answers to the same question in Nepal. None of those answers comes from the Tourism Act. They come from a schedule attached to the country’s investment statute.
The dividing line
Section 3(2) of the Foreign Investment and Technology Transfer Act 2075 (2019) prohibits foreign investment in the activities listed in the Act’s Schedule. The Schedule forms part of the Act, so it is amended by legislation rather than by notice. No minister has discretion to waive it.
Four tourism-facing heads sit on the closed side:
- Travel agencies
- Tourist guiding
- Trekking and mountaineering guiding
- Rural tourism, including homestay
Everything else in tourism is open. Hotels, resorts, restaurants, cable cars, fun parks and sports tourism carry no sectoral ownership limit, and several appear on the list of activities eligible for automatic online approval.
The line runs between the fixed asset and the demand-generating layer. Accommodation, infrastructure and attractions may be foreign owned. The entity that sells the trip, the entity that supplies the guide, and the household-scale accommodation regime may not.
What the bar costs
The commercial model most international tourism groups bring to a new market is vertically integrated. Own the product, own the distribution, own the guiding standard that differentiates it. In Nepal that model cannot be built through equity. A foreign-owned resort in Chitwan can employ staff, market itself and take direct bookings. It cannot own the licensed travel agency that packages a fourteen-day itinerary around it, and it cannot own the licensed trekking agency that supplies the guide, the permit application and the liaison with the Department of Tourism.
So the relationship between the foreign-owned asset and the Nepali-owned agency has to be written rather than owned, and the contract carries all the weight a shareholding would otherwise carry. Exclusivity, allocation, rate parity, brand standards, staff training, termination and the fate of forward bookings on termination all become negotiated terms with a counterparty the investor does not control. Where a group would elsewhere accept a thin management agreement, here the agency contract is the deal.
Two further consequences follow. Foreign-owned hotels lean more heavily on international online distribution than on domestic packaging, because the domestic packaging layer belongs to a third party. And the pricing of the agency relationship attracts transfer pricing and foreign exchange scrutiny that would never arise if the two entities sat in the same group.
Three further gates
Three more constraints apply to an activity that clears the Schedule.
The minimum. Each foreign investor must commit at least NPR 20 million, under a Ministry of Industry, Commerce and Supplies notice dated 14 November 2022. For a boutique lodge, a single restaurant or a small adventure operation, that floor binds more often than the Schedule does. An open activity too small to reach NPR 20 million is, as a matter of direct equity, closed.
The approving body. Below NPR 6 billion of project cost the Department of Industry approves; at or above it, Investment Board Nepal does. Resort and integrated-development projects can straddle that line as land and phasing assumptions move, and filing with the wrong body restarts rather than transfers the application.
Sectoral licensing. FITTA approval establishes that foreign money may enter the activity. It does not produce the licence to carry it on. Hotels are registered and classified by the Department of Tourism under the Tourism Act 2035 (1978), which remains in force. Adventure activities carry their own operating standards, and casinos are licensed separately. The investment gate and the operating gate are two files with two authorities.
The reserved layer
The Ministry’s 2023 statistics record 4,845 registered travel agencies and 3,191 registered trekking agencies, against 182 star hotels and 1,416 non-star tourist-standard hotels. That is roughly five licensed agencies for every registered tourist-standard hotel.
That fragmentation follows directly from reserving the layer. Capital cannot consolidate it, so it has not consolidated. For a foreign hotel investor the effect cuts both ways. No dominant intermediary can dictate terms, and a resort that becomes commercially important will usually find an agency willing to work to its standards. Against that, most counterparties are small, thinly capitalised and hard to diligence. An agency contract is worth whatever the counterparty’s balance sheet can support when something goes wrong on a trek.
Investors who expect to be allowed to buy their agency partner one day should keep that assumption out of the structure. The Schedule has been amended twice since 2019, both times to add a cap rather than to open a closed head.
Aviation ownership caps
Air transport once sat outside FITTA’s Schedule, with foreign ownership limits handled through aviation policy. The omnibus act authenticated on 31 March 2025 moved them into the investment statute: 80% for international air services, 49% for domestic air services, and 95% for aviation training and maintenance organisations.
Placing the caps in FITTA rather than the Civil Aviation Act has a practical effect. The Department of Industry now applies them at the approval stage, instead of the Civil Aviation Authority of Nepal applying them at licensing, so a foreign carrier’s ownership question is settled before it reaches the regulator. It also shows the legislature’s preferred instrument for tourism-adjacent liberalisation: a cap written into the Schedule rather than the opening of a closed head.
Casinos
Casino operation is a licensed tourism activity administered by the Department of Tourism, which runs a casino registration system and supervises operators as reporting institutions for anti-money-laundering purposes. A Casino Regulation 2082 has been made and published by the Ministry, replacing the Casino Regulation 2070 line. The Department issued a risk-based casino inspection guideline in 2082 and a targeted financial sanctions guideline for casinos in 2083. That places the sector squarely inside Nepal’s response to FATF increased monitoring.
The published files are scanned images, and we could not read the current licence conditions, fees or royalty. Anyone underwriting a casino as part of a hotel project should treat the licence terms as an open item. They should treat the anti-money-laundering supervision as a live operating obligation rather than a formality.
The pending tourism bill
The Tourism Act 2035 is nearly fifty years old and has been amended repeatedly. An Integrated Tourism Bill intended to replace it passed the National Assembly on 9 February 2026. It has not completed passage, and it is not law. Commentary describing Nepal as having a new tourism act is wrong as at August 2026.
For an investor the more important point is that the bill, whatever it eventually says, sits in the wrong statute to change what matters most. The reservation of travel agencies, guiding and homestay lives in the Schedule to FITTA. A new tourism act could restructure the licensing categories entirely and leave the ownership bar exactly where it is. Watch the investment statute rather than the sectoral one.
Where an activity comes back closed, the realistic alternatives are contractual. A licence, a technology transfer agreement within the permitted royalty ceilings, a management or franchise arrangement, or a supply relationship with a Nepali-owned operator. Each is a separate regulatory file, and the general framework is set out in the negative list and in market entry routes compared.
Sources
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Foreign Investment and Technology Transfer Act, 2075 (2019)
Government of Nepal (text published by the Department of Industry) · Authenticated 2019 — in force, as amended · Tier 1 — Primary legal instrument
Supports: Section 3(2) and the Schedule of activities in which foreign investment is not permitted, including the tourism entries and the 51% consultancy cap.
Accessed 26 August 2026
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Foreign Investment in Nepal 2024
Department of Industry, Ministry of Industry, Commerce and Supplies · October 2024 · Tier 2 — Official publication
Supports: The department's restatement of the restricted list, the NPR 20 million minimum and its 14 November 2022 notice, and the NPR 6 billion split between the Department of Industry and Investment Board Nepal.
Accessed 26 August 2026
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पर्यटन ऐन, २०३५ (Tourism Act, 2035)
Government of Nepal, published by the Ministry of Culture, Tourism and Civil Aviation · 1978 (2035 BS) — in force as at August 2026, as amended · Tier 1 — Primary legal instrument
Supports: That the Tourism Act 2035 is the licensing statute for travel and trekking agencies, hotels and guides, and that it remains the instrument published by the Ministry.
Accessed 26 August 2026
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Pradhan & Associates · 6 April 2025 · Tier 6 — Professional or news source
Supports: The aviation ownership caps introduced into FITTA by the omnibus act authenticated 31 March 2025: 80% international, 49% domestic, 95% training and maintenance.
Accessed 26 August 2026
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Rules and Regulations — Casino Regulation 2082 and Air Service Management Regulation 2082
Ministry of Culture, Tourism and Civil Aviation · Listed 2082 BS (2025/26) · Tier 2 — Official publication
Supports: That a Casino Regulation 2082 and an Air Service Management Regulation 2082 have been made and are published by the Ministry, superseding the Casino Regulation 2070 line of instruments.
Accessed 26 August 2026
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Ministry of Culture, Tourism and Civil Aviation (published via Nepal Tourism Board) · 2024, covering calendar 2023 · Tier 2 — Official publication
Supports: Counts of registered travel agencies, trekking agencies and guides, and of star and non-star hotels and beds.
Accessed 26 August 2026
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