CARE Ratings Nepal Limited (CRNL) has assigned a ‘CARE-NP BB-’ rating to the long-term bank facilities of Budhanilakantha Forest Hills Private Limited (BFHPL), which is developing a 63-key luxury hospitality and wellness resort in Budhanilakantha-1, Kathmandu. The rating has been assigned to proposed long-term bank facilities amounting to Rs. 550 million, according to CARE Ratings Nepal’s September 2026 press release.
Rs. 1.11 Billion Project to Combine Luxury Hospitality and Wellness
Budhanilakantha Forest Hills Private Limited, incorporated on July 9, 2019, is developing the proposed resort with a total estimated project cost of around Rs. 1.109 billion. The project will comprise 63 rooms: 33 under the conventional luxury hospitality segment and 30dedicated to wellness and retreat-based offerings.
The wellness component is planned to include a range of specialized programs and activities such as teacher training, retreats, sound healing, Ayurveda, music therapy and corporate wellness programs. Through this combination, the company aims to serve both conventional luxury hospitality customers and the growing niche market for wellness, retreat and experiential tourism.
According to CARE Ratings Nepal, Budhanilakantha Forest Hills Private Limited (BFHPL) is proposed to be financed through a 50:50 debt-equity structure. While the debt component is currently in the process of being tied up, approximately 47% of the proposed equity commitment had been infused as of the end of August 2026. The company has also already acquired the required land and awarded the construction contract, which the rating agency said partially mitigates land acquisition and initial implementation risks.
CARE Ratings Flags Project Implementation and Stabilization Risks
CARE Ratings Nepal said the assigned rating is primarily constrained by the implementation risk associated with the under-construction hotel and wellness project and the operational stabilization risk expected after commencement of operations. The rating agency noted that Budhanilakantha Forest Hills Private Limited (BFHPL) projects generally involve significant upfront investment and a relatively long gestation period before achieving optimum occupancy and stable profitability.
As the Budhanilakantha Forest Hills Private Limited (BFHPL) project is still under development, its ability to complete construction within the planned timeframe and budget, while ensuring adequate availability of funding, will remain important. The Budhanilakantha Forest Hills Private Limited (BFHPL) will also need to establish the resort’s market position, attract its targeted customer base and achieve sustainable occupancy and room rates after operations begin.
CARE Ratings Nepal said the project’s differentiated positioning in the luxury hospitality and wellness segment could require additional time to establish a market presence and reach the projected operating and financial parameters. Accordingly, timely project completion and successful stabilization of operations have been identified as key rating sensitivities.
Hospitality Sector Faces Competition and Cyclical Demand
The rating agency also highlighted the cyclical nature and competitive environment of Nepal’s hospitality industry. The sector includes a large number of organized and unorganized players, creating intense competition for customers and affecting occupancy levels and room rates. Hospitality demand is also influenced by domestic and international economic conditions, tourist arrivals and other external factors. As Budhanilakantha Forest Hills Private Limited (BFHPL) will operate a single property in Kathmandu, the company will remain exposed to geographical and asset concentration risks.
The proposed resort’s focus on luxury hospitality and wellness retreats means its future revenue and profitability will also depend on demand for these segments. CARE Ratings Nepal said the company’s ability to build a strong market position, attract and retain customers, maintain satisfactory occupancy and room rates, and adapt its offerings to changing market conditions will remain important for stable operations.
Floating Interest Rates Remain a Financial Risk
Budhanilakantha Forest Hills Private Limited (BFHPL) will also remain exposed to fluctuations in interest rates, as its proposed borrowing is based on a floating interest rate structure. Under this arrangement, a premium is added to the monthly base rate, with the applicable interest rate changing accordingly. CARE Ratings Nepal noted that base rates of banks and financial institutions in Nepal can fluctuate depending on liquidity conditions in the financial system. Any increase in interest rates beyond the company’s projections could put pressure on margins and affect its liquidity position. However, the rating agency noted that the near-term outlook is relatively supportive given the declining trend in bank and financial institution base rates observed over recent quarters.
Experienced Promoters Provide Project Strength
The project also derives strength from the experience of its promoters and management team. Dr. Rajendra KC, who chairs Budhanilakantha Forest Hills Private Limited (BFHPL), has more than 26 years of experience across education, organizational development, agriculture, hospitality and social sectors. The Budhanilakantha Forest Hills Private Limited (BFHPL)’s board also includes Shreejana KC, who has experience in education, engineering and development sectors. CARE Ratings Nepal said the promoters’ diverse experience, combined with an experienced management team covering key functional areas, provides support for the implementation of the project and its subsequent operations. The rating agency has identified the promoters’ experience and resources in related fields as one of the key strengths supporting the project.
Budhanilakantha Location Offers Luxury and Wellness Advantage
The proposed resort’s location in Budhanilakantha in northern Kathmandu is another factor supporting its business potential, according to CARE Ratings Nepal. The property benefits from road connectivity to major parts of the Kathmandu Valley and is located close to commercial areas, educational institutions and prominent tourism and religious attractions.
The project is also situated near Budhanilakantha Temple, a major religious destination in the area. Its location is considered particularly suitable for the planned luxury hospitality and wellness positioning, as the area offers a relatively tranquil environment while remaining accessible from major parts of Kathmandu. The location is expected to support demand from leisure travellers, wellness seekers and corporate customers, providing the project with access to multiple customer segments.
Tourism Sector Investment Expected to Support Hospitality Industry
CARE Ratings Nepal also noted that tourism remains a priority sector for the Government of Nepal, with the FY2026/27 budget continuing to emphasize tourism infrastructure, heritage conservation, destination development and aviation infrastructure. The government has allocated approximately Rs. 7.34 billion for culture and tourism and Rs. 2.93 billion for civil aviation in the budget. Key initiatives include development of the Greater Lumbini area, promotion of new tourism destinations and trekking corridors, conservation of heritage sites and improvements to major airports, including Tribhuvan International Airport, Pokhara International Airport and Gautam Buddha International Airport.
According to the rating agency, these initiatives could support tourism infrastructure and destination development over the medium term and create a more conducive operating environment for hospitality businesses such as Budhanilakantha Forest Hills Private Limited (BFHPL). However, the potential benefits will depend on the effective implementation of the proposed government initiatives and sustained growth in tourist arrivals.
Project Completion and Successful Operations to Determine Future Performance
With land acquisition already completed, the construction contract awarded and a portion of the proposed equity already infused, Budhanilakantha Forest Hills Private Limited (BFHPL) has made progress on the development of the resort. Nevertheless, CARE Ratings Nepal has emphasized that timely completion within the estimated cost, adequate funding availability and successful stabilization after commencement of operations will remain critical to the company’s future financial performance.
The planned combination of luxury accommodation and specialized wellness offerings will position the project across two hospitality segments. Its ability to establish a distinct market identity, attract customers and achieve the projected occupancy and room rates will therefore be closely linked to the project’s eventual operating performance. CARE Ratings Nepal has accordingly assigned the ‘CARE-NP BB-’ rating to the Rs. 550 million long-term bank facilities of Budhanilakantha Forest Hills Private Limited, with project execution and post-completion operational performance remaining key factors for future rating assessment.
