Infomerics Credit Rating Nepal Limited has reaffirmed the bank facility ratings of Grand Central Hotel Limited (GCHL), which operates Ramada by Wyndham Itahari Pashupati Marg, maintaining an IRN BB rating for its long-term bank facilities and IRN A4 for its short-term facilities. The reaffirmation covers total bank facilities worth NPR 1.37 billion, following an increase in the amount of rated facilities.
According to Infomerics Nepal’s October 2026 rating report, the company’s long-term bank facilities of NPR 1.30074 billion have been reaffirmed at IRN BB, while its short-term bank facilities of NPR 70 million have retained the IRN A4 rating. The total rated facilities have increased to NPR 1.37074 billion from the previously reported NPR 1.133 billion.
The rating agency said the completion of the hotel project and the commencement of commercial operations have substantially reduced project implementation risks. However, the hotel’s early stage of operations, low occupancy, operating losses and debt-funded investment continue to place pressure on its financial performance.
Grand Central Hotel Begins Operations Under Ramada by Wyndham Brand
Grand Central Hotel Limited is a special-purpose company established to own and operate a five-star hotel in Itahari, Sunsari, with a total of 80 rooms. The hotel commenced commercial operations in February 2026 under a brand licensing agreement with Wyndham Hotel Asia Pacific Company Limited.
The Grand Central Hotel operates under the name Ramada by Wyndham Itahari Pashupati Marg, linking the property with an internationally recognised hospitality group. Infomerics Nepal noted that the brand affiliation could strengthen the hotel’s market position, visibility, and ability to attract guests.
Wyndham is among the world’s largest hotel franchising groups, with a portfolio of more than 9,000 hotels across over 90 countries, according to the rating report. The partnership is expected to support the hotel’s brand value and long-term business prospects as it works to establish itself in the regional hospitality market.
The Grand Central Hotel is promoted by seven individual shareholders, with Desh Bandhu Basnet serving as chairman and holding more than 99 percent of the company’s shares, according to the report. Basnet brings experience in project development, investment and management across several sectors, including hospitality and tourism.
Strategic Location Offers Access to Indian and Corporate Markets
The Grand Central Hotel’s location in Itahari is a key business strength. Situated approximately 30 kilometres from the Indo-Nepal border, the property is positioned to attract Indian visitors for leisure, entertainment and wedding-related events. Itahari’s business environment also provides opportunities to serve corporate clients and host meetings, programmes and other events. Infomerics Nepal expects these market segments to contribute to the hotel’s business prospects as its operations mature.
The rating agency also identified the Government of Nepal’s continued policy focus and support for tourism as a positive factor for the hospitality sector. Nevertheless, the Grand Central Hotel will need to translate its location and international brand affiliation into stronger occupancy, revenue and profitability.
Low Occupancy Remains a Major Challenge
Despite beginning commercial operations, Grand Central Hotel continues to face operational stabilisation risks. Infomerics Nepal reported that the hotel recorded an average occupancy rate of only 14 percent in fiscal year 2025/26 (FY26), which declined to 13 percent during the first two months of fiscal year 2026/27 (FY27).
The low occupancy rate reflects the challenge of building demand during the initial phase of operations. As a new hotel in a competitive market, the company must attract a sufficient number of guests to cover operating expenses and meet its financial obligations.
The rating agency said the hotel’s future operating performance will depend largely on its ability to increase occupancy and average room rates. Improvements in these areas will be essential to generating adequate cash flows for debt servicing and moving towards sustainable profitability.
The Grand Central Hotel’s financial indicators for FY26 highlight the pressure associated with its early operating stage. Total operating income stood at NPR 41 million, while its EBITDA margin was negative. Interest coverage and total debt-to-EBITDA ratios were also reported as negative, reflecting operating losses and weak debt-servicing capacity.
Debt-Funded Investment Weighs on Financial Position
The Grand Central Hotel’s substantial capital investment, largely financed through borrowing, remains a key constraint on its credit profile. Infomerics Nepal reported an overall gearing ratio of 2.40 times and a total outside liabilities-to-tangible net worth (TOL/TNW) ratio of 2.61 times in FY26.
The company also reported a current ratio of 0.49 times, indicating that its current assets were insufficient to cover its current liabilities at the reporting date. The rating agency identified weak liquidity and negative cash accruals as concerns, as the company remains unable to rely on internally generated funds to comfortably meet its financial obligations.
The hotel’s operating losses and negative interest coverage further underline the need to improve revenue generation and manage costs. While the project has moved beyond the construction and implementation phase, its financial sustainability will depend on how quickly operations stabilise and cash flows improve.
Infomerics Nepal said effective cost management, higher occupancy and improved profitability will be important for strengthening the company’s debt-servicing capacity. The ability to sustain an operational recovery will remain a key factor in its financial performance.
Competition and Limited Diversification Pose Risks
The hotel operates in a highly competitive hospitality market, where established hotels and other accommodation providers compete for leisure travellers, corporate clients and event business. The fragmented nature of the industry increases the challenge for newly opened properties seeking to establish a sustainable market position.
Grand Central Hotel also operates a single property in Itahari, leaving it with limited geographic and business-segment diversification. Its performance is therefore closely linked to demand conditions in the local market and the ability to attract visitors to the property.
The hotel industry is also exposed to the cyclicality and seasonality of tourism demand. Changes in tourist arrivals, travel patterns and competition can affect occupancy and room rates, potentially putting further pressure on revenue and cash flow. Infomerics Nepal said the company’s ability to establish a strong position in the market and manage competitive pressures remains to be demonstrated as operations progress.
Higher Rated Bank Facilities Reaffirmed
The reaffirmed ratings cover NPR 1.30074 billion in long-term bank facilities and NPR 70 million in short-term bank facilities, bringing the total to NPR 1.37074 billion. The long-term facilities carry an IRN BB rating, while the short-term facilities retain an IRN A4 rating. Both ratings have been reaffirmed, according to the October 2026 report.
The rating agency’s assessment was based on a standalone analytical approach and considered the hotel’s completed project, international brand affiliation, promoter experience and location, alongside its low occupancy, operating losses, leveraged capital structure and weak debt coverage. Going forward, improvements in occupancy, average room rates, revenue and profitability will be central to Grand Central Hotel’s ability to strengthen its financial position and sustain its credit profile.
