Kathmandu: CARE Ratings Nepal Limited (CRNL) has reaffirmed the CARE-NP B+ rating assigned to the long-term bank facilities of Annapurna Vista Retreat Private Limited (AVRPL), while noting that the company’s under-construction five-star hotel project in Simara remains exposed to implementation risks and the operational challenges typically associated with large hospitality investments.
The rating agency has maintained the CARE-NP B+ (Single B Plus) rating on the company’s Rs. 1.54 billion long-term bank facilities, citing the promoters’ experience, strategic location of the proposed hotel and positive long-term prospects for Nepal’s tourism sector. However, CARE Ratings Nepal has cautioned that timely completion of the project, operational stabilisation and successful market positioning will be crucial for the company’s future financial performance.
Long-Term Bank Facility Rating Reaffirmed
CARE Ratings Nepal has reaffirmed the CARE-NP B+ rating assigned to Annapurna Vista Retreat Private Limited’s Rs. 1.54 billion long-term bank facilities. The rating agency stated that the reaffirmation reflects confidence in the company’s experienced promoter group and the long-term potential of the project, despite the risks associated with a large hotel development that is still in its early stages of construction. According to CARE Ratings Nepal, the company’s ability to complete the project within the planned budget and timeline, followed by successful commercial operations, will remain the key factors influencing future rating actions.
Five-Star Hotel Under Construction in Simara
Annapurna Vista Retreat Private Limited is developing a five-star hotel in Simara, Bara, on a site covering approximately 60,000 square metres. The proposed hotel will have 117 guest rooms and will include a range of premium hospitality facilities such as restaurants, food and beverage services, a swimming pool, conference and banquet halls, a spa, casino and other modern amenities designed to cater to both domestic and international travellers. The company expects the hotel to begin commercial operations from mid-July 2028 (FY2029). Once completed, the project is expected to become one of the largest hospitality developments in the Bara-Simara region.
Construction Progress Still in Early Phase
CARE Ratings Nepal noted that the project is currently in the early stage of construction, making implementation risk one of the primary concerns. The total estimated investment for the hotel stands at Rs. 1.97 billion, of which Rs. 1.54 billion is planned to be financed through debt, with the remaining amount to be contributed by the promoters as equity.
Out of the proposed debt financing, approximately Rs. 980 million has already been tied up, providing initial financial support for project implementation. According to the rating agency, land acquisition has already been completed and soil excavation works are currently underway. As of 10 July 2026, the project had achieved around 13 percent financial progress. CARE Ratings Nepal stated that the project remains exposed to execution risks, including possible delays in construction, cost overruns and challenges in completing the project within the planned schedule.
Long Gestation Period Remains a Key Challenge
The rating agency emphasised that premium hotel projects generally require a long period before generating sustainable profits. Hotels of this scale often take three to four years to construct, while another two to three years may be required after opening before occupancy levels, revenues and profitability stabilise.
Because of this long gestation period, Annapurna Vista Retreat will need to carefully manage its finances during both the construction and early operational phases. CARE Ratings Nepal stated that once the hotel begins operations, its success will depend on its ability to attract guests, establish a strong brand presence, maintain healthy occupancy rates and generate sufficient cash flow to meet debt obligations.
Competition and Market Cyclicality Pose Risks
CARE Ratings Nepal also highlighted the competitive nature of Nepal’s hospitality industry. The agency noted that Nepal’s hotel sector remains fragmented, with a large number of organised and unorganised operators competing across different regions. Hotel occupancy levels, room rates and revenues are closely linked to domestic and international tourism trends, economic conditions and overall travel demand. As a result, any slowdown in tourism or increased competition could place pressure on occupancy rates and average room revenues, affecting the company’s financial performance.
Floating Interest Rates Could Increase Financing Costs
Another factor influencing the rating is the company’s exposure to floating interest rates. The company’s borrowings are linked to the base rates of banks and financial institutions, which fluctuate according to liquidity conditions in Nepal’s financial system. CARE Ratings Nepal stated that although lending rates have generally shown a declining trend in recent quarters, any future increase in interest rates could raise financing costs, reduce profitability and weaken liquidity.
Experienced Promoters Strengthen the Project
Despite the risks, CARE Ratings Nepal believes the company benefits from an experienced and financially capable promoter group. The project is being led by Rameshwar Thapa, a well-known entrepreneur who serves as Chairman of Simrik Air Private Limited and is the Executive Chairman and principal owner of Annapurna Media Network, which operates Annapurna Post, Radio Annapurna and AP1 Television.
The company is also promoted by Sahadev Khadka, who has around 15 years of experience in Nepal’s construction sector. He also serves as the Managing Director of Bhimeshwor Drilling Tatha Nirman Sewa Private Limited, bringing technical expertise that CARE Ratings Nepal believes will support project execution. The rating agency stated that the combined experience of the promoters strengthens the company’s ability to manage a large-scale hospitality project.
Strategic Location Expected to Boost Visitor Demand
CARE Ratings Nepal identified the hotel’s location as one of its major strengths. The property is situated in Simara, Bara, approximately three kilometres from Simara Airport, providing convenient air connectivity for domestic travellers. It is also located around 20 kilometres from Raxaul, one of the busiest border towns connecting Nepal and India, making the hotel accessible to business travellers engaged in cross-border trade.
In addition, the hotel is located close to Parsa National Park, one of Nepal’s important wildlife destinations, which attracts both domestic and international visitors interested in nature-based tourism. The combination of tourism, business travel and cross-border commerce is expected to support future demand for the hotel.
Government Support Strengthens Tourism Outlook
CARE Ratings Nepal also cited Nepal Government policies supporting tourism as a positive factor for the project. The FY 2026/27 national budget allocated approximately Rs. 7.34 billion for culture and tourism programmes and Rs. 2.93 billion for civil aviation development.
Major government initiatives include the expansion of the Greater Lumbini Development Programme, promotion of Janakpur as a wedding tourism destination, development of the Great Himalayan Trail, conservation of heritage sites and continued investment in aviation infrastructure, including Tribhuvan International Airport, Pokhara International Airport and Gautam Buddha International Airport. CARE Ratings Nepal believes these investments will strengthen Nepal’s tourism industry over the medium term and create favourable conditions for hospitality businesses.
Project Completion Will Be the Key Rating Driver
CARE Ratings Nepal concluded that while Annapurna Vista Retreat Private Limited benefits from experienced promoters, a strategic location and a positive long-term tourism outlook, the company’s future credit profile will largely depend on the successful execution of the project.
Timely completion of construction, effective cost management and the ability to establish stable hotel operations after the planned opening in mid-2028 will remain the most important factors determining the company’s future financial performance and rating outlook. The agency noted that achieving the projected occupancy levels and generating sustainable revenue will be essential for strengthening debt servicing capacity and ensuring the long-term success of the five-star hospitality project.
