Infomerics Credit Rating Nepal Limited has reaffirmed the issuer rating of IRN BB+ (Is) assigned to Swornim Hotel Limited, reflecting growing confidence in the company’s improving financial structure and gradually stabilizing operational performance. The June 2026 rating review indicates that the company continues to maintain a moderate risk of default regarding timely servicing of financial obligations, while demonstrating positive signs of long-term business stabilization.
The reaffirmation follows a period of significant financial restructuring for the Kathmandu-based hospitality company, particularly after a major equity infusion and reduction in debt exposure, both of which have considerably strengthened the company’s capital position. According to Infomerics Nepal, the improved capital structure combined with growing hotel occupancy rates and the backing of experienced promoters contributed positively to maintaining the current rating outlook.
Strong Improvement Seen in Capital Structure Following Equity Infusion
One of the strongest factors supporting the rating reaffirmation has been the company’s substantial improvement in capital structure over the past year. Swornim Hotel Limited witnessed a major increase in paid-up capital, rising sharply from approximately NPR 535 million in FY24 to NPR 1.52 billion by mid-July 2025.
This capital strengthening significantly reduced the company’s debt burden and improved key leverage indicators. The company’s overall gearing ratio improved from 1.70 times in FY24 to 0.43 times, while total outside liabilities to tangible net worth declined substantially from 2.02 times to 0.49 times during the same period. Rating analysts noted that Swornim Hotel Limited’s plan to further reduce debt through upcoming IPO issuance and utilization of equity proceeds could continue improving financial flexibility and strengthen the company’s long-term balance sheet.
Hotel Operations Show Steady Occupancy Growth Since Commercial Launch
Swornim Hotel Limited has shown notable improvement in operational performance since commencing full commercial operations in December 2023. Swornim Hotel Limited operates Holiday Inn Express Kathmandu, an internationally branded hotel located in one of Kathmandu’s prime hospitality and tourism districts.
According to the rating report, average occupancy levels improved significantly from around 36 percent in FY24 to approximately 69 percent in FY25, reflecting growing customer acceptance and stronger market traction. Occupancy remained relatively stable at approximately 65 percent until mid-May of FY26, indicating gradual operational stabilization after the hotel’s initial launch period. Infomerics Nepal stated that these occupancy figures represent an encouraging sign for a newly launched hospitality property operating within Nepal’s highly competitive hotel industry.
International Partnership with Holiday Inn Express Strengthens Market Position
Another major strength supporting the company’s rating comes from its strategic partnership with InterContinental Hotels Group under the internationally recognized Holiday Inn Express franchise brand. Swornim Hotel Limited operates under a hotel management agreement with IHG, one of the world’s largest hospitality companies operating more than 6,600 hotels across over 100 countries worldwide as of September 2025.
Through this partnership, the company receives access to international marketing systems, advanced hospitality technology, technical operational support, consultation services, and the global brand recognition associated with Holiday Inn Express. Analysts believe this international association gives the company a competitive advantage by providing stronger market credibility, broader customer reach, and access to global booking systems widely used by international travelers.
Strategic Location in Kathmandu Supports Growing Tourist Demand
The hotel’s location has also been highlighted as a key operational advantage. Situated in Naxal, the property benefits from one of Kathmandu’s most strategically valuable hospitality zones frequently preferred by international tourists visiting Nepal. Its central location provides convenient access to major heritage sites, commercial districts, diplomatic areas, cultural landmarks, and business centers within the capital city.
The property also enjoys proximity to Tribhuvan International Airport, making travel logistics easier for both leisure and business travelers. Industry experts note that hotels positioned within Kathmandu’s premium tourism corridor often benefit from stronger occupancy rates, particularly with Nepal’s tourism sector continuing to recover steadily.
Financial Performance Remains Modest Despite Revenue Growth
Despite operational improvements, Infomerics Nepal noted that Swornim Hotel Limited continues to face financial performance challenges due to its early-stage operations. The company generated revenue of approximately NPR 232 million in FY25, a significant increase from NPR 82 million recorded in FY24.
During the first nine months of FY26, the company reported additional revenue of approximately NPR 150 million, while EBITDA stood at roughly NPR 57 million in FY25 and NPR 29 million in the first nine months of FY26. However, despite revenue growth, net profitability remains negative primarily due to high financing costs associated with the company’s debt obligations and operational expansion expenses. The rating agency emphasized that improving profitability and eventually achieving breakeven performance will be critical for strengthening the company’s long-term credit profile.
Expansion Plans Bring New Implementation and Operational Risks
Swornim Hotel Limited is currently undertaking expansion of its existing hotel property through an additional capital expenditure project estimated at approximately NPR 735 million. Infomerics Nepal noted that the expansion project remains in its early implementation phase, and since part of the financing strategy depends on successful IPO issuance, project execution timelines will remain closely monitored moving forward.
Although hotel occupancy has improved, analysts cautioned that the company has not yet achieved full operational stabilization. Maintaining high occupancy, building consistent customer demand, managing operational efficiency, and successfully expanding hotel infrastructure remain important future challenges.
Competition in Kathmandu Hospitality Market Remains Intense
The rating report also highlighted intense competition within Nepal’s hotel industry as one of the company’s major operating risks. Kathmandu’s hospitality market remains highly fragmented, with a large number of established, organized and independent hotels competing for domestic and international guests.
Since Swornim Hotel Limited currently operates only a single hotel property in Kathmandu, the company remains exposed to geographic concentration risk, limiting business diversification. As Nepal’s hospitality sector remains heavily dependent on international tourist arrivals, analysts noted that the company’s ability to sustain competitive positioning against established market players will remain an important factor affecting future performance.
Company Continues Growth Journey Under Experienced Leadership
Originally established as Swornim Boutique Hotel Private Limited on August 24, 2012, the company was later converted into a public limited company on July 2, 2024, and officially renamed Swornim Hotel Limited. The company is backed by strong institutional investors, with Nepal Life Investment Company Limited holding the largest equity stake of 20.52 percent.
The company operates under the leadership of Chairman Naresh Lal Shrestha, supported by experienced board members and General Manager Vara Prasad Gutha, who brings more than a decade of hospitality management experience. With improving occupancy levels, a stronger capital structure, international branding support, and future expansion plans underway, Swornim Hotel Limited remains one of Nepal’s emerging hospitality sector companies, being closely monitored by investors and tourism industry stakeholders.
