Developing and Operating a Hotel in Nepal

In 2023 Nepal recorded 1,014,882 international arrivals staying an average of 13.2 days, or about 13.4 million visitor-nights. Registered tourist-standard accommodation that year came to 54,370 beds, which at 365 days is roughly 19.8 million bed-nights of capacity. That arithmetic is the part most hotel proposals skip.

Taken at face value the ratio is 67.5%, which sounds like a functioning market. It is nowhere near the real number, and every way it overstates occupancy runs in the same direction. Visitor-nights are not all spent in registered beds. Trekking teahouses, homestays, unregistered lodges, monasteries and stays with friends and relatives absorb a large share, especially in the regional segment that makes up two-fifths of arrivals. Most leisure rooms sell to two people, so a room-night serves two visitor-nights and the effective bed capacity is used at half the intensity the calculation implies. And demand is not spread evenly across the year.

Apply those three corrections and system-wide occupancy of registered beds falls well below half. That is the market a new hotel enters.

Seasonality

March, April, October and November carried 41.8% of 2023 arrivals between them, and October ran at 2.03 times July. A hotel sized for the autumn peak carries its full cost base through a monsoon in which arrivals fall by half.

The consequences show up in the capital structure rather than the P&L. Debt service is monthly and demand is not, so Nepali hotel projects tend to be underwritten on peak-season rate assumptions and then refinanced. Staffing is the other pressure point. A property that lays off through the monsoon loses trained staff to the Gulf and Malaysia, then rehires in September at a premium. A property that keeps them carries payroll against a quarter of the revenue.

The properties that handle this best have a second demand source that ignores the trekking calendar: conference and government business in Kathmandu, pilgrimage in Lumbini, domestic weekend demand in Pokhara and Chitwan. That second source is usually what the model rests on, and usually the part with the least evidence behind it.

Room rates

Average expenditure was USD 41 per visitor per day in 2023, across all visitors and all categories of spend, accommodation included. That is no accommodation rate and should never be used as one. It is a ceiling on the blended market. Any project assuming an average daily rate several times USD 41 is assuming it will capture a segment far above the national mean, and it needs to say which segment and why it will reach it.

The star-rated end of the market plainly operates well above that mean. There were only 182 star hotels in 2023 against 1,416 non-star tourist-standard hotels, and the Hotel Association Nepal member list runs from five-star down through deluxe resorts to tourist-standard. High-rate demand certainly exists; the commercially useful question is how many nights of it there are. The honest answer is that the published statistics do not break spend down by accommodation category.

The approvals sequence

For a foreign-invested hotel the file runs, in order:

1. Foreign investment approval. Department of Industry below NPR 6 billion of project cost, Investment Board Nepal at or above. Each foreign investor must commit at least NPR 20 million. Hotels are not on the FITTA Schedule, so the activity itself is open.
2. Incorporation at the Office of the Company Registrar, and tax registration.
3. Industry registration, where the project is registered as an industry.
4. Land. Site acquisition, and where the holding exceeds the ceilings under the land legislation, an exemption. This is the step most likely to determine the timetable, and it sits outside the Tourism Act entirely.
5. Environmental clearance, at the level the project’s scale and location require.
6. Local approvals — building permit and construction approval from the municipality or rural municipality.
7. Registration as a tourist-standard hotel with the Department of Tourism under the Tourism Act 2035.
8. Classification against the Hotel Standard 2077, if the property is to carry a star grade.

Steps 1 to 6 have nothing to do with tourism, and they are where projects lose years. Steps 7 and 8 belong to the tourism regulator and are comparatively quick. A proposal that presents the Department of Tourism as the principal approval risk has usually mis-sequenced its own critical path.

Star classification

Classification is a departmental function performed against a published Hotel Standard 2077, with a 2076 notice on the classification of hotels. In June 2026 the Department published a regulation titled Hotel, Lodge and Guide Regulation 2083. Both the standard and the 2083 regulation are posted as scanned images, neither could be read, and we state the criteria for no star grade.

Why the grade is worth having beyond marketing can still be said. Star classification is the reference point used across Nepali tourism regulation for eligibility, for fee scales and for the treatment of ancillary activities, casino operation among them. A property built to a specification and then classified below it has an asset problem rather than a branding one. Treat the classification criteria as a design input rather than a post-completion application.

The distribution problem

A foreign-owned hotel in Nepal owns the asset and cannot own the demand. Travel agencies, tourist guiding and trekking guiding are closed to foreign investment by the Schedule to the Foreign Investment and Technology Transfer Act 2075 (2019). The entity that packages a fourteen-day itinerary around a resort, and the entity that supplies the guide, are both third parties by operation of law.

For a city hotel selling to individual travellers through international booking platforms, that is an inconvenience. For a resort or lodge whose demand arrives in groups assembled abroad and routed through a Nepali agency, it is the central commercial fact. Allocation, rate parity, exclusivity and the fate of forward bookings if the agency relationship ends are all terms a group operating anywhere else would have settled by owning both ends. Here they have to be drafted, and the counterparty is typically small. Nepal had 4,845 registered travel agencies and 3,191 trekking agencies in 2023 against 1,598 registered tourist-standard hotels, and almost all of them are thinly capitalised.

For underwriting, that means a Nepali hotel’s revenue quality rests on a contract with a counterparty whose balance sheet will not support a claim. Concentration in that contract is a real risk and belongs in the model as one.

Casinos

Casino operation is separately licensed and supervised by the Department of Tourism, under a Casino Regulation 2082 that replaced the 2070 line, with a risk-based inspection guideline issued in 2082 and a targeted financial sanctions guideline in 2083. Three points matter to a hotel developer. The casino is a distinct licence with distinct conditions. The operator is a reporting institution under Nepal’s anti-money-laundering regime, with the supervision that implies. And the licence terms could not be verified for this page. Keep a casino out of a hotel’s revenue model until those terms have been read.

What the data omits

Arrivals in 2025 were 1,158,459, still 3.2% short of 2019, and registered bed capacity has grown since 2023. Neither series is published in a form that separates Kathmandu and Pokhara from the national total. The district-level supply position is what a developer actually needs. Anyone underwriting a property in either city should build that count from the Department’s own register rather than a national aggregate, and should expect the answer to be less comfortable than the national ratio suggests.

Sources

1. Nepal Tourism Statistics 2023

   Ministry of Culture, Tourism and Civil Aviation (published via Nepal Tourism Board) · 2024, covering calendar 2023 · Tier 2 — Official publication

   Supports: 182 star hotels, 1,416 non-star hotels and 54,370 beds at Table 9.1; monthly arrivals at Table 2.2; average length of stay of 13.2 days at Table 3.1; average daily expenditure of USD 41 at Table 7.2.

   Accessed 26 August 2026

2. Nepal Tourism Insights, December 2025

   Nepal Tourism Board · January 2026 · Tier 2 — Official publication

   Supports: Full-year 2025 arrivals of 1,158,459 and the 96.8% recovery ratio against 2019.

   Accessed 26 August 2026

3. Rules — Department of Tourism (Hotel Standard 2077, Hotel Classification Notice 2076, Hotel Lodge and Guide Regulation 2083)

   Department of Tourism, Ministry of Culture, Tourism and Civil Aviation · Listing accessed August 2026; Hotel, Lodge and Guide Regulation 2083 posted June 2026 · Tier 2 — Official publication

   Supports: That hotel classification is governed by a departmental Hotel Standard 2077 and a 2076 classification notice, and that a Hotel, Lodge and Guide Regulation 2083 has been published.

   Accessed 26 August 2026

4. 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 hotels and lodges are registered as tourist-standard establishments under the Act and that the Act remains the governing statute.

   Accessed 26 August 2026

5. Hotel Association Nepal

   Hotel Association Nepal · Accessed August 2026 · Tier 6 — Professional or news source

   Supports: That the industry association represents more than 300 hotels, resorts and guest houses and lists members by star and deluxe resort category.

   Accessed 26 August 2026

6. Foreign Investment in Nepal 2024

   Department of Industry, Ministry of Industry, Commerce and Supplies · October 2024 · Tier 2 — Official publication

   Supports: The NPR 20 million per-investor minimum and the NPR 6 billion split between the Department of Industry and Investment Board Nepal.

   Accessed 26 August 2026