Northward Ho!
Gorkha Travels Pvt. Ltd. has recently signed a deal to become the sole agent of China Southern Airlines in Nepal . The airlines will ferry travellers from the Chinese city of Guangzhou (formerly Canton ) to Kathmandu and vice versa. With this new route, Gorkha Travels expects a lucrative business in the future.
Several decades ago, Gorkha Travels was one of the premier tour operators in Nepal but in recent years it had become largely dysfunctional due to deteriorating management. So, when Deepak Bhatta of Fox Tours and Travels acquired it nine months ago, that proved to be the firm’s salvation. Bhatta, on his part, has taken over the company for a very strategic reason -- to break into the 'inner circle of travel agencies'.
According to Bhatta even though there are 600 travel agencies in the country, only a handful have the luxury of getting the General Sales Agent (GSA) status which enables any agency to stock air tickets. Soon after starting Fox Tours and Travels Pvt. Ltd., he discovered that a tour operator without a sound background had very limited chances of success. He explains that there are concentric circles in the travel and trade business in Nepal . Very few (only five or six) agencies are in the inner circle, some 20 are in the outer circle and the rest are virtually excluded. For a new company, it is very difficult to break the cycle and get into the inner circle to make real profits.
"If I establish a travel agency and have a nice hold on the market, I can do ticketing, but not keep the tickets in stock. Only 15-20 companies have the privilege of stocking tickets. I requested many airlines for tickets, I even told them that I would meet their targets but they told me to meet the targets first. But that is illogical," laments Bhatta. "When I get tickets for 7 per cent commission how will I sell them at 9 per cent discount as the major stockists do? I will have to bear losses for years. In such a situation even if you manage to sell some tickets, your work does not get counted because you are selling for the stockist agency," says Bhatta. That is why getting the opportunity to buy Gorkha Travels was a jackpot.
Gorkha Travel's brand name has enormous goodwill even now. "During its heyday it even had single deals worth three to three-and-a-half million rupees to bring Indian tourists to Nepal," Bhatta exclaims. But during the last several years, Gorkha Travels was on the verge of collapse. Nevertheless, it did still retain the rights to stock tickets of major airlines operating in Nepal. So when a close friend of Bhatta's, who was also one of the promoters of Gorkha Travels, approached him and suggested he acquire the company, there was no question of hesitation."I immediately saw that buying Gorkha Travels would enable me to break into that inner circle of travel agencies. That is how I was able to sign the deal with China Southern. Now we have businesses from countries like Germany trying to work with us whereas for Fox, it was a completely different story," says Bhatta. Now Fox has a strategic business alliance with Gorkha Travels and Fox is the actual promoter and ticket distributor of China Southern. Retail tickets of China Southern are also sold by other travel agencies like Osho and Union.
Going to Guangzhou
Initially, China Southern had not wanted to come to Nepal. They only agreed to operate flights after Bhatta's team convinced the airlines' top management that the route would be profitable. "We argued that many MBBS students from Nepal would go to Guangzhou and the adjoining city Shenzhen. And Guangzhou is the place from where most of the Chinese goods come into Nepal . Nepali importers till now bring them via Hong Kong . Many Nepalis also go to Macau for employment and it can be reached via Guangzhou very easily. A direct flight to Guangzhou costs Rs. 40,000 and the duration of the flight is only four hours whereas from other airlines, the cost might cross Rs. 70,000 as there is no other direct flight from Nepal to Guangzhou . The time taken would be substantially more too," says he.
In the future, Guangzhou could also be a medical destination for Nepali patients similar to what Bangkok and Indian cities are today. According to Bhatta, the doctors there are very experienced and they are especially known for their expertise in heart diseases, and bone and cholesterol problems. The city's hospitals are also renowned for low costs but high quality and efficient service.
The two flights from Kathmandu to Guangzhou are scheduled at a very strategic time. "The scheduling of flights at 11 pm was very deliberate," says Bhatta. This is because the concept of business has changed in Nepal , asserts he. "Earlier, business meant that retailers would buy goods from wholesalers. But now the retailers import the merchandise themselves. With the midnight flights, retailers can shut their shops in the evening, say about 7 pm , get to the airport by 9 pm and hop on the 11 pm flight. After four hours, they reach Guangzhou at 6 am China time," explains Bhatta. This also saves money for a night stay at a hotel. The planes being used for the flights are 757 Boeings with 198 seats and there are two flights every week (on Mondays and Fridays). As Southern already has the licence to operate four flights per week it is planning to increase the number of flights from the present two if the demand arises.
More importantly, there are big prospects of people from Guangzhou visiting Nepal as tourists. Bhatta says that the economic status of the Guangzhou residents has grown drastically over the last decade. In other Chinese cities like Beijing , the people are mainly government jobholders so they have less disposable income. In Shanghai , they work for multinational companies and they do have money but tend to not spend too much. "But in Guangzhou , people are in international trading, so they are very rich and they do not mind spending money on leisure. There are two huge trade fairs in Guangzhou every year to showcase everything produced in China . One hall in Guangzhou can accommodate 500,000 people," marvels Bhatta. People from all over the world come there to order goods. The people of Guangzhou , acting as middlemen, take orders and go to the villages to get the goods manufactured. "They work hard for two months and go on vacations for five days," says Bhatta.
Since people from Guangzhou have been travelling extensively, they are fed up with popular destinations like Malaysia , Thailand and Switzerland , notes Bhatta and says "They need new locations. Chinese operators were saying that Nepal was a good destination but it took two days to reach because of the unavailability of direct flights." The Chinese are also increasingly interested in Buddhism, so that is another opportunity for Nepal .
Another big opportunity for Gorkha Travles is that English language courses are cheaper in Nepal compared to other countries. Because many Chinese businessmen have to deal with multinational companies, there is good demand for English language training. So looking at this need, Bhatta says that he has already made plans with the British Council and the American Language Centre to provide English lessons to Chinese business people. While the three month long course costs 7,000 dollars elsewhere, it will only cost 1,800 dollars here."
The problem is that people in Guangzhou (or for that matter in whole of China ) do not know much about Nepal . That is why, during the first week of February, Gorkha Travels, together with Fox, brought 30 Guangzhou journalists on an all-expenses paid tour here. They went to various parts of the country to learn more about Nepal. "If they understand Nepal, people in Guangzhou will do so too," says Bhatta. Also, 28 Nepali journalists were taken to Guangzhou so that they would publicise the city in the Nepali media.
However there are challenges ahead for Gorkha Travels. Since the Nepali government does not have any representation in Guangzhou, the Chinese have to get their visas from Hong Kong or another part of China. According to new Chinese rules, its nationals going abroad have to get their visas stamped on their passport within China itself. Therefore, the Nepali rule to grant on-arrival visas is of no help. Many people who wanted to come to Nepal on the first flight nearly cancelled their bookings upon hearing that they had to go elsewhere to get their visas stamped. Bhatta had to send people from Nepal to collect all the passports and take them to Hong Kong for the visa.
The dearth of Chinese speaking guides and Chinese restaurants is an additional problem. Though there are several restaurants in Kathmandu serving Chinese food, the Chinese tourists have not rated them highly. Outside Kathmandu, there is virtually no Chinese restaurant.
Nevertheless, Bhatta has put his mind to bringing 1,000 Chinese tourists to Nepal every month. After that is done for some months, he says he will go to the government to ask for official Nepali representation in Guangzhou.
