CARE Ratings Nepal Limited (CRNL) has assigned a ‘CARE-NP BB-’ rating to the long-term bank facilities of Tiger Forest Hotel Private Limited (TFHPL), while its short-term bank facilities have been assigned a ‘CARE-NP A4’ rating, as the company moves ahead with plans to transform its existing property in Tilottama, Rupandehi, into a five-star resort.
The total rated bank facilities of the Tiger Forest Hotel Private Limited (TFHPL) stand at Rs. 1.542 billion, comprising Rs. 1.482 billion in long-term facilities and Rs. 60 million in short-term facilities. The long-term facilities include Rs. 482.81 million in existing term loans and Rs. 1 billion in proposed facilities, while short-term facilities comprise Rs. 10 million in existing fund-based limits and Rs. 50 million in proposed facilities.
According to CRNL, the ratings primarily reflect the project stabilisation risk arising from the Tiger Forest Hotel Private Limited (TFHPL)’s currently small scale of operations and implementation risks associated with its planned expansion expenditure. The rating agency has also highlighted the company’s exposure to intense competition in the hospitality industry, tourism-sector cyclicality and volatile interest rates. At the same time, the rating receives support from the experience of the promoter in the hospitality and related sectors, the property’s strategic location in Tilottama, Rupandehi, and the government’s continued focus on tourism development, along with the growing flow of tourists into Nepal.
Existing Hotel Operating with 20 Rooms
Tiger Forest Hotel Private Limited was incorporated as a private limited company on September 6, 2015, under the Companies Act, 2006. The Tiger Forest Hotel Private Limited (TFHPL) currently operates a property with 20 rooms in Tilottama, Rupandehi, and generated Rs. 45 million in operating income during FY2026. However, the company’s current operating profitability remains weak. Its PBILDT margin stood at only 1.13% in FY2026, while its overall gearing ratio stood at 2.32 times and interest coverage ratio at just 0.02 times.
The Tiger Forest Hotel Private Limited (TFHPL)’s current ratio stood at 1.76 times, while total debt to gross cash accruals remained negative due to inadequate cash accruals. CARE Ratings has noted that relatively high debt levels and associated interest costs continue to put pressure on the company’s profitability, particularly during the early years of operation. Since hotel projects generally require a considerable period to recover fixed costs and achieve stable profitability, the ability of Tiger Forest Hotel Private Limited (TFHPL) to expand its operations and improve its operating performance will remain critical.
Company Plans Rs. 1.5 Billion Phase II Expansion
Tiger Forest Hotel Private Limited (TFHPL) is undertaking a major expansion project aimed at transforming its existing 20-room property into a 100-room five-star resort. Under the planned Phase II development, the Tiger Forest Hotel Private Limited (TFHPL) intends to add 80 rooms, taking the total room capacity to 100.
The proposed luxury resort is expected to feature wooden villas and rooms, eco-friendly architectural elements and a range of leisure and hospitality facilities designed to create a differentiated tourism product in Lumbini Province. The expansion project has an estimated cost of Rs. 1.5 billion. The company plans to finance approximately Rs. 1 billion through debt, with the remaining amount expected to be funded through equity, implying a debt-equity ratio of around 67:33.
However, the debt required for the additional capital expenditure had not yet been tied up at the time of the rating assessment. The company’s paid-up capital stood at Rs. 243 million as of mid-July 2026. CARE Ratings has therefore identified timely execution of the expansion project, cost control and adequate equity infusion as important factors for the company’s future credit profile. Any delay in implementation could result in cost overruns and postpone the anticipated cash-flow generation from the expanded property.
Five-Star Resort to Feature Luxury and Leisure Facilities
The proposed development is designed to position Tiger Forest Hotel as a major luxury hospitality property in the region. The expanded resort is expected to include 100 room keys, luxury wooden villas and rooms, a swimming pool, landscaped gardens, a children’s play area and casino-related facilities, alongside other hospitality and leisure amenities. One of the distinctive attractions planned under the project is the Barasinghe Beer Garden, a draft-served venue offering the full range of Barasinghe beers. The company expects the combination of accommodation, food and beverage, leisure and entertainment facilities to help establish a differentiated hospitality offering in the region and attract both domestic and international visitors.
Strategic Location Near Lumbini and Indian Border
One of the major strengths identified by CARE Ratings is the strategic location of the property. The Tiger Forest Hotel Private Limited (TFHPL) is situated in Tilottama, Rupandehi, in close proximity to the Indo-Nepal border and Bhairahawa Airport. The location provides access to Lumbini, a UNESCO World Heritage Site and one of Nepal’s major religious and historical tourism destinations. Lumbini attracts visitors from Nepal and international markets, particularly pilgrims and cultural tourists.
The development of Gautam Buddha International Airport in Bhairahawa is also expected to support greater tourist movement into the region over the medium to long term. The property’s proximity to the Indian border is considered another strategic advantage. According to CARE Ratings, the location could support casino-oriented tourism because of its proximity to major Indian markets and comparatively tighter regulatory conditions in neighbouring Indian states such as Uttar Pradesh and Bihar. The region also has potential as a destination for corporate meetings, conferences, weddings and other events, providing the hotel with opportunities to diversify its revenue sources beyond conventional room sales.
Experienced Promoter Supports Credit Profile
The company’s rating also derives strength from the experience of its promoter and management team. Tiger Forest Hotel Private Limited (TFHPL) is managed under the chairmanship of Min Raj Bhusal, an entrepreneur with experience across the FMCG, food and beverage and hospitality sectors. Bhusal also serves as the Vice President of the Nepal Liquor Production Organization. He is supported by an experienced management team responsible for different operational and functional areas of the company. CARE Ratings has considered the promoter’s industry experience and understanding of the hospitality and food and beverage businesses as a positive factor in assessing the company’s ability to execute and operate the proposed resort.
Low Current Profitability Remains a Major Concern
Despite its strategic location and expansion plans, Tiger Forest Hotel Private Limited (TFHPL) currently faces significant financial challenges. The company generated only Rs. 45 million in operating income in FY2026, while its PBILDT margin remained at 1.13%. The company’s interest coverage ratio of 0.02 times indicates extremely limited operating earnings relative to its interest obligations.
The high debt burden is expected to remain a challenge as the company moves into the next phase of expansion. The proposed additional debt could further moderate the company’s gearing and debt coverage indicators in the near term. CARE Ratings has therefore emphasized the importance of timely equity infusion, prudent debt management and improvement in operating cash flows. For the rating profile to strengthen, the company will need to demonstrate a sustained improvement in occupancy, average room rate and profit margins after the expansion becomes operational.
Hospitality Sector Faces Cyclicality and Rising Competition
The hotel industry remains vulnerable to changes in both domestic and international tourism demand. CARE Ratings has highlighted the sector’s susceptibility to macroeconomic conditions and unexpected disruptions, citing the COVID-19 pandemic as an example of how external shocks can severely affect tourist arrivals and hotel occupancy. For Tiger Forest Hotel Private Limited (TFHPL), such risks are particularly relevant because the company’s revenues are predominantly dependent on the hospitality sector and the tourism performance of the Lumbini and surrounding region.
Competition is also expected to intensify. Several new hotel properties are likely to enter the Lumbini region over the next three to five years, which could increase pressure on room rates, occupancy and margins. As competition increases, Tiger Forest Hotel Private Limited (TFHPL) will need to establish a strong market position, differentiate its products and services and maintain effective marketing and operational strategies to protect its return indicators.
Floating Interest Rates Add Financial Pressure
The company’s debt exposure also leaves it vulnerable to changes in interest rates. Tiger Forest Hotel Private Limited (TFHPL)’s borrowing costs are based on a floating interest rate structure, under which a premium is added to the monthly base rate of banks and financial institutions. Changes in liquidity conditions in Nepal’s financial system can therefore affect the base rates and, consequently, the company’s interest expenses. Any significant increase in borrowing costs could place additional pressure on profitability and liquidity, particularly while the company is undertaking its large-scale expansion project. Managing interest-rate exposure and maintaining adequate liquidity will consequently remain important for the company as its debt obligations increase.
Government Tourism Initiatives Provide Positive Industry Tailwinds
Despite the challenges facing individual hospitality companies, CARE Ratings has maintained a favourable medium-term view of Nepal’s tourism industry. Tourism remains one of the government’s priority sectors, with the FY2027 budget continuing to emphasize tourism-led economic growth through investments in heritage conservation, tourism infrastructure, trekking routes, destination development and aviation facilities. The government has allocated approximately Rs. 7.34 billion for culture and tourism activities and around Rs. 2.93 billion for civil aviation development in the FY2027 budget.
Key initiatives include the expansion of the Greater Lumbini Development Programme, promotion of Janakpur as a wedding destination, development of the Great Himalayan Trail and regional tourism corridors, conservation of heritage sites and enhancement of airport infrastructure. The continued development of Tribhuvan International Airport, Pokhara International Airport and Gautam Buddha International Airport is also expected to strengthen Nepal’s tourism infrastructure and connectivity. These government initiatives, combined with increasing tourist arrivals, could provide favourable industry conditions for hospitality projects located in strategic tourism destinations such as Lumbini and Bhairahawa.
Occupancy, Room Rates and Project Execution to Determine Future Rating
Going forward, the ability of Tiger Forest Hotel to increase occupancy, improve average room rates and maintain healthy profit margins will be central to its financial recovery and credit profile. CARE Ratings has also identified the company’s ability to complete the proposed expansion within the estimated project cost and debt levels as a key rating sensitivity. Timely equity infusion and successful financial closure of the proposed debt will be particularly important for the project. The successful transformation of the existing 20-room property into a 100-room five-star resort could significantly increase the company’s operating scale. However, the expansion will simultaneously expose the company to higher financial obligations and execution risks.
As a result, timely completion of the project, control over construction costs, adequate equity support, improvement in occupancy and generation of sustainable operating cash flows will determine whether Tiger Forest Hotel Private Limited (TFHPL) can convert its strategic advantages into a stronger financial and credit profile. With its location near Lumbini, Bhairahawa Airport and the Indian border, experienced promoter and planned luxury resort development, Tiger Forest Hotel has significant potential to emerge as a notable hospitality property in the region. However, the company must first overcome its current low profitability, small operating scale, high financial leverage and project implementation challenges to fully realize that potential.
