The occupancy rates of five-star hotels in Kathmandu Valley have plummeted to an average of 20% following the conclusion of Christmas and New Year 2025 celebrations. According to industry sources, the decline is attributed to a seasonal drop in foreign tourist arrivals, as many prefer to spend the holidays with their families at home.
The reduced influx of tourists has led hotels to lower room prices to attract guests. A senior official from the Hotel Association of Nepal (HAN) confirmed the emergence of a “price war” among five-star hotels. To lure customers, these hotels are offering attractive packages, including meals and accommodations at heavily discounted rates.
Rooms previously priced at NPR 15,000–20,000 are now being offered for NPR 8,000–10,000, which includes breakfast, lunch, dinner, and deluxe room accommodations. “Why would guests choose mid-tier hotels when they can stay in five-star luxury for the same price?” a hotel operator remarked, highlighting the adverse impact on smaller hotels.
Kathmandu Valley’s hospitality sector is experiencing an oversupply. Although the current hotel capacity is sufficient to accommodate 3 million tourists annually, according to the Nepal Tourism Board (NTB), only 1.15 million tourists visited Nepal in 2024.
Adding to the strain, half a dozen new hotels, many affiliated with international chains, commenced operations in late 2024 and early 2025. These newer establishments are leading the price reduction trend, leveraging their lower operational costs to attract customers.
A veteran hotelier expressed concern over this trend, stating, “The price war initiated by new hotels is putting established hotels under significant pressure. While it helps them survive, it undermines the overall health of the industry.”
The competition among five-star hotels to fill rooms has intensified, but experts warn that this strategy could harm the long-term sustainability of the hospitality sector. Industry stakeholders are urging collaborative efforts to balance pricing strategies and maintain the overall quality of Nepal’s tourism offerings.
As the tourism sector seeks recovery, addressing challenges such as market saturation, seasonal demand fluctuations, and fair competition will be crucial for the stability of the hotel industry in Kathmandu Valley.
