Tourism Info Nepal

Hotels in Nepal Finally Recognized as Productive Industries

Hotels in Nepal Finally Recognized as Productive Industries

After years of lobbying and anticipation, Nepal’s hotel sector has officially gained recognition as a productive industry. Despite significant investments and providing employment to thousands, the sector had long been excluded from this designation. The Industrial Enterprises Act 2019 (2076) has now been amended to classify star hotels and tourism resorts under industries of national priority.

This amendment stems from recommendations by a legal reform task force formed by Nepal’s ruling coalition. The government approved the ordinance in a Cabinet meeting, but it still awaits certification by the President’s Office. Once approved without changes, star hotels and resorts will enjoy the benefits accorded to productive industries.

Vinayak Shah, president of the Hotel Association Nepal (HAN), acknowledged the development but emphasized awaiting formal certification before celebrating. He stated, “If true, this is a moment of happiness for us.”

The government has amended the law to integrate star hotels as productive industries, offering associated benefits. Minister for Industry, Commerce, and Supplies, Damodar Bhandari, reiterated the government’s commitment to creating an investment-friendly environment and generating more employment by prioritizing such industries.

As a productive industry, hotels are now entitled to several benefits under the amended act. These include concessional electricity tariffs, tax incentives, and the ability to acquire government-owned land for industrial purposes. Businesses can also enjoy tax rebates of up to 20% on income generated through production and additional incentives for export-oriented activities.

The hotel industry has long contributed to Nepal’s economy by generating employment, promoting tourism, and fostering linkages with other sectors like agriculture, transportation, banking, and handicrafts. According to the World Travel and Tourism Council’s 2024 report, over 1.2 million jobs in Nepal are directly or indirectly tied to the hospitality and tourism sectors.

Hotels also play a critical role in foreign currency earnings by catering to international tourists. Industry leaders have been advocating for incentives similar to those granted to export-oriented industries, arguing that hotels indirectly support the export of Nepali products and services.

In addition to its economic contributions, the hotel sector enhances workforce skills by offering training and development programs, preparing Nepali workers for global markets.

The government’s recognition of the hotel sector as a productive industry is expected to bolster investment and further integrate it into Nepal’s economic growth framework. With this milestone, Nepal aims to attract more international visitors and solidify its position as a premier tourism destination.

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