Rupakot Resort Limited, a four-star resort in Rupakot, Pokhara, is expanding its hospitality operations following a steady improvement in business performance. The resort plans to increase its room capacity from the current 51 rooms to 69 rooms and add a new restaurant as it seeks to strengthen its presence in Nepal’s growing tourism and hospitality market.
According to a September 2026 rating report by CARE Ratings Nepal Limited (CRNL), the Rupakot Resort Limited recorded operating income of Rs 130 million, equivalent to Rs 13 crore, in FY 2025/26. This represents an increase of around 30% from Rs 100 million in FY 2024/25 and Rs 74 million in FY 2023/24. The resort had operated 42 rooms until the end of FY 2025/26 and added nine rooms in August 2026, taking its operating capacity to 51 rooms.
Expansion to Raise Capacity to 69 Rooms
Rupakot Resort is undertaking a phased expansion of its property. The company has already increased its room capacity to 51 and plans to further expand it to 69 rooms. The expansion will include the addition of 18 rooms and a new restaurant, with completion targeted by mid-July 2027. Around 88% of the financial progress of the expansion project had been achieved by mid-September 2026, according to CARE Ratings Nepal. The additional investment is expected to enable the resort to accommodate more guests while expanding its food and beverage operations. The project is being financed through additional equity infusion.
Operating Profit Margin Improves to 14.44%
The Rupakot Resort Limited has recorded a significant improvement in its operating performance in recent years. Its PBILDT margin, a measure of operating profitability, increased from only 0.19% in FY 2023/24 to 13.46% in FY 2024/25 and further to 14.44% in FY 2025/26. Gross cash accruals also improved substantially, rising from Rs 9 million in FY 2024/25 to Rs 21 million in FY 2025/26. However, CARE Ratings noted that relatively high depreciation and interest expenses continue to weigh on the company’s net profitability. The hotel industry also generally requires a longer period to recover fixed costs and achieve sustainable profitability.
Capital Structure Strengthens with Rs 42.2 Crore Equity Infusion
Rupakot Resort’s capital structure improved significantly during FY 2025/26 following an equity infusion of Rs 422 million, or Rs 42.2 crore. The company’s overall gearing ratio declined from 3.43 times at the end of FY 2024/25 to 1.16 times in FY 2025/26. Its interest coverage ratio improved to 4.31 times from 2.57 times during the same period.
The current ratio also improved from 0.22 times to 0.69 times. Despite the improvement, the rating agency noted that liquidity remains an area to be monitored. Total debt to gross cash accruals stood at 36.86 times in FY 2025/26, although this represented an improvement from 87.68 times in the previous fiscal year.
IPO Planned for Debt Reduction
The company is also preparing to enter Nepal’s capital market through an initial public offering (IPO) to the general public. According to CARE Ratings Nepal, the proposed IPO proceeds are expected to be used primarily for debt reduction. The move could help strengthen the company’s financial structure while supporting its expansion plans. Rupakot Resort currently has total rated bank facilities of Rs 789 million, comprising Rs 784 million in long-term bank facilities and Rs 5 million in short-term facilities.
CARE Ratings Nepal has assigned an issuer rating of CARE-NP BB- (Is) to the company. Its long-term bank facilities have been rated CARE-NP BB-, while its short-term bank facilities have received CARE-NP A4. The ratings indicate moderate risk regarding timely servicing of financial obligations, according to the rating agency.
Resort Converted into Public Company in July
Rupakot Resort was incorporated as a private limited company on February 13, 2012, and was subsequently converted into a public limited company on July 16, 2026. The Rupakot Resort Limited is spread across approximately nine acres of land in Rupakot, Pokhara. The company is chaired and managed by Sushil Adhikari, who has more than five years of experience in the tourism sector. Founder and Director Pushpa Raj Adhikari also has experience in the hospitality industry, while Executive Director Manish Adhikari has more than five years of experience in tourism.
Strategic Location Supports Tourism Potential
The Rupakot Resort Limiteds location is considered one of its key strengths. It is situated in Rupakot, approximately 22 kilometers from Pokhara Domestic Airport, while Rupa Lake is around five kilometers away and Begnas Lake approximately six kilometers from the property. The resort offers panoramic views of the Himalayan range and access to the natural and recreational attractions around Pokhara. Its location provides an opportunity to cater to visitors seeking nature-based, leisure and scenic tourism experiences away from the more densely developed areas of central Pokhara. CARE Ratings Nepal has identified the resort’s strategic location as one of its key strengths, alongside the experience of its promoters and improvement in its capital structure.
Tourism Growth Creates Opportunities Amid Competition
Nepal’s tourism recovery is providing a favorable operating environment for the hospitality sector. According to CARE Ratings Nepal, international tourist arrivals reached around 1.16 million in calendar year 2025, while arrivals during the first seven months of 2026 increased by 6.8% year-on-year to 692,228.
The rating agency noted that the hospitality sector continues to benefit from government support, improving connectivity and rising domestic and international tourism. At the same time, hotel and resort businesses remain exposed to fluctuations in tourist arrivals, economic conditions, natural disasters, geopolitical developments and other external shocks. Rupakot Resort also faces intense competition in the hospitality market and exposure to floating interest rates. Changes in bank base rates could increase its interest burden and affect profitability and liquidity.
Expansion Execution Remains Key Challenge
CARE Ratings Nepal has identified the implementation of the planned expansion as an important factor for the company’s future performance. Any delay in completing the project could result in cost overruns and affect the expected timeline for generating additional cash flows.
The rating agency has also highlighted the importance of improving occupancy levels and average room rates while maintaining healthy profit margins. The company’s ability to successfully complete the expansion, increase operational scale and sustain cash accruals will remain important to its future financial performance. With its capacity already increased to 51 rooms and plans underway to reach 69 rooms, Rupakot Resort is positioning itself for further growth in Pokhara’s competitive tourism and hospitality market.
