Nepal’s hotel industry has witnessed impressive growth in recent years, making it a cornerstone of the country’s thriving tourism sector. With 212 operational hotels, including 23 five-star hotels, 3 deluxe five-star hotels, and 40 four-star hotels, the accommodation landscape caters to a broad spectrum of travelers. Additionally, there are a growing number of heritage hotels that contribute to Nepal’s charm as a unique tourist destination. This sector’s progress underscores Nepal’s potential to become a leading global tourism hub.
Current Status of the Industry
Although Nepal’s hotel infrastructure has expanded significantly, the industry is currently operating at an average occupancy rate of only 35–40%. With a capacity to host 3.5 million tourists annually, Nepal currently welcomes only 1.1 to 1.2 million foreign visitors per year. This mismatch between capacity and actual arrivals reveals the need for enhanced promotional activities and global marketing strategies to increase Nepal’s international tourism appeal.
Economic Impact of Tourism and Hospitality
Tourism is a major contributor to Nepal’s economy. In 2023, the sector contributed 6.8% to Nepal’s GDP, totaling Rs 488.3 billion, a significant increase from 2.1% in 2022. With a projected annual growth rate of 4.3% until 2033, the tourism sector is expected to continue expanding rapidly. In 2022 alone, the travel and tourism industry generated 311,125 jobs, a figure projected to rise to 412,028 by 2033, reflecting the sector’s critical role in providing employment and supporting local economies.
The Economics of Five-Star Hotels
Developing five-star hotels is a high-cost venture, with each room requiring an investment of approximately NPR 10 million. For a typical 100-room hotel, the total investment can exceed NPR 2 billion. This significant financial commitment has attracted both domestic and international investors, reinforcing the belief in Nepal’s long-term potential as a premium tourism destination. The presence of renowned international hotel chains also boosts the country’s global tourism profile.
Historical Development and Milestones
Nepal’s tourism industry began opening to the world in 1951, with the historic ascent of Mount Everest in 1953 marking a key milestone. The formation of the National Tourist Development Board and Nepal Airlines in 1958 helped lay the foundations of a robust tourism infrastructure. One of the most notable landmarks in the history of Nepal’s hospitality industry is the Soaltee Hotel, which opened in 1966. Initially launched by the royal family, the Soaltee brand has since expanded its presence to other regions, solidifying its legacy in Nepal’s hospitality sector.
Expanding Beyond Traditional Hubs
Kathmandu and Pokhara have long been the main tourist hubs, but there is growing interest in other destinations. Emerging cities such as Bhairahawa, Lumbini, Nepalgunj, Dhangadhi, Dang, Chitwan, Biratnagar, and Jhapa are now witnessing the rapid development of hotels and resorts, which is helping to spread the benefits of tourism across the country. This regional diversification is vital for inclusive economic growth, allowing tourists to explore less traditional, but equally captivating, areas of Nepal.
The Role of International Hotel Chains
The arrival of international hotel chains has significantly boosted Nepal’s hospitality sector. Prestigious brands such as Marriott, Hyatt, Sheraton, Hilton, Aloft, Fairfield by Marriott, and BEST WESTERN have set up operations in Nepal. Their presence not only raises the service standards in the country but also helps attract high-value international tourists, contributing to the overall growth of Nepal’s global tourism profile.

New Developments: Under-Construction Hotels
Currently, 18 five-star hotels are under construction across Nepal. These projects are poised to enhance the country’s capacity to accommodate more high-end tourists and generate thousands of jobs. The construction of these hotels is indicative of the growing confidence in Nepal’s tourism potential and the importance of the hospitality sector in supporting the nation’s economic development.
Challenges in the Tourism and Hospitality Sector
Despite its potential, Nepal’s hospitality sector faces several challenges. Political instability, lack of sufficient infrastructure, and the need for sustainable tourism practices continue to be major concerns. The 2015 earthquake, followed by the COVID-19 pandemic, further delayed recovery, impacting the sector’s growth trajectory. The industry also faces ongoing challenges related to policy implementation, infrastructure gaps, and inadequate recognition of hospitality as a separate sector.
The Importance of Policy Reforms
To unlock the full potential of the hospitality sector, Nepal needs more streamlined policies and regulatory frameworks. Recognizing the hospitality industry as a distinct sector would allow for better coordination and financial support. The government must also digitize the hotel registration process to make it more accessible and ensure that smaller establishments are registered to meet regulatory standards. Policies that address infrastructure deficits and promote tourism in a more sustainable and inclusive manner are essential.
The Role of NRNs in Hotel Industry Growth
The Non-Resident Nepalis (NRNs) have played a key role in Nepal’s hotel industry, contributing both capital and expertise. Many NRNs have already invested in high-end resorts and hotels, demonstrating their confidence in the sector’s growth. However, there is significant potential for further investment. To encourage more NRNs to invest, the government must offer land on long-term leases, grant support for projects in underserved provinces, and incentivize larger investments. A more investor-friendly regulatory environment, along with improved infrastructure, will attract more NRNs to contribute to the hotel industry’s growth.
Job Creation in the Sector
The hotel industry is a significant job creator in Nepal. In 2022, it generated 311,125 jobs, with projections indicating that this number will increase to 412,028 by 2033. The construction of new hotels, including the 18 five-star hotels currently under development, will further boost employment in the sector. The jobs created range from managerial positions to hospitality services, benefiting both urban and rural areas as tourism spreads beyond traditional hubs.
The Government’s Efforts
The government of Nepal has introduced various policies aimed at supporting the tourism and hospitality sectors. These include multiple-entry visas, online applications for tourists, and investments in eco-friendly tourism initiatives. However, collaboration with the private sector is critical for improving infrastructure and developing innovative tourism products. More policy initiatives that address the unique needs of the hotel industry can further improve the sector’s competitiveness and attractiveness to international tourists.
Opportunities for Revitalization
As Nepal recovers from the impact of the pandemic, the hospitality industry has a chance to reinvent itself. Focusing on workforce development, enhancing marketing strategies, and creating strong networks between various stakeholders will be key to revitalizing the sector. Leveraging digital marketing tools, promoting Nepal’s unique cultural and natural attractions, and offering tailored experiences will help Nepal stand out as a top tourist destination in the region.
A Bright Future Ahead
The future of Nepal’s hotel industry looks incredibly promising. With increasing investment from both domestic and international players, along with growing interest from NRNs, the sector is poised for significant expansion. By addressing existing challenges through strategic policy reforms, sustainable practices, and regional diversification, Nepal can fully capitalize on its tourism potential. The rapid development of the hotel sector will continue to play a pivotal role in driving economic growth, creating jobs, and cementing Nepal’s position as a global tourism destination.
Written By: Som Sapkota (Tourism Promoter for Wales, Ministry of Culture, Tourism, and Civil Aviation, Nepal)