"Look at tourism properly" 

Talking to us recently in an interview after over two years of the die was cast in a gamble with institutional restructuring in the country's tourism sector, Shrestha views that some of the assumptions of the restructuring have proved wrong. Excerpts:

Based on your long experience in Nepal's tourism sector, how do you comment on the transformation that has happened over the period in this industry ?

In the past we used to think that if tourism in India booms, Nepal will benefit from the spillover. But the actual situation turned out to be different. While tourism was declining in India, it grew in Nepal. The major contributing factor was that Nepal followed an open sky policy. The Tourism Master Plan of 1972 has been the first Plan ever prepared for this sector in Nepal and still it is the plan that is being followed. The date when the department of tourism was dissolved and Nepal Tourism Board (NTB) was set up is another milestone in Nepal's tourism history. Nepal was the only country in South Asia where the government did not operate a hotel. That is, Nepali tourism has always been a private sector affair and NTB was set up to institutionalize this fact. And, other counties learnt from us. Singapore had Singapore Tourism Promotion Board doing only promotions. Later they modeled it after NTB and called it Singapore Tourism Board.

How do you evaluate NTB's performance so far ?

It is over two years now that NTB is in existence. But its performance so far has proved that the assumptions of private sector being already mature to take up the leadership at national level, has proved only partially true.

All three indicators of a successful implemental of a marketing plan - higher arrivals, longer stay and higher spend - are not there for the last two years.

How do you see the frequent disputes over leadership in NTB ?

Tourism industry has four components: accommodation providers - i.e. hotels, travel/tour operators, transporters and entertainment. The representatives in NTB had to take into consideration the interests of all these components. In reality they did not think from national perspective but from the sub-sectoral prospective of the individual representative. Hoteliers prefer to spend the promotional budget in neighbouring markets, because fill their interest to the hotel rooms anyway, but travel agencies prefer Europe or America because tourists from there give them more revenue. So the priorities become diverse. NTB seems to be not sufficiently effective to reconcile these diverse interests.

What could be the reasons that NTB could not function as expected ?

For one, you can also say that perhaps NTB should have been made to start within Department of Tourism (DOT) so that there would have been a continuity. You see, they had to start from the zero as the experience of the DOT was not transferred to NTB. Apart from that, there also are other events blamed, for example, the Indian Airlines hijack, deteriorating security situation and negative publicity in international media. But from my experience with the sector, I say, such happenings are frequently experienced in any other tourist destination. Tourism is a human activity, and therefore there is a continuity in it. Planes crash, but people don't stop flying. However, there may be some temporary effects from such happenings, and the raisons d'etre for institutions like NTB are exactly these situations.

If the foreign missions here put a travel advisory on the Internet suggesting their nationals not to visit Nepal, our national tourism agency should issue statement assuring the would be visitors that they will be safe while in Nepal and that if anything untoward happens, the agency is ready to bear the compensation for the losses the tourist may incur. Then, you can leave the decision to the tourist.

Our assumption was that when the government and private sector come together, the result will be a strong institution. But NTB has been in limbo - now it is neither private sector organisation nor a government sector one. The private sector representatives in the board seem to have no strong linkages with the mass of the tourism entrepreneurs.

We should go for "reinstatement of the image". There should be campaign by the authorities to convince about security to the tourists. They should offer a guarantee in case the insurance coverage is not available to the visitors. I believe that the present marketing budget of NTB will be sufficient for this.

Donor agencies are now working for helping tourism sector. How do you see it ?

Till a decade or so ago tourism was regarded as a luxury business that catered to the fancy of the rich from developed countries. World Bank, ADB, UNDP did not like to invest in this sector. Nepal played a very important role to change that concept. ADB helped in Nepal's tourism infrastructure development project about 12 years ago and that was the first time that they did so in this sector. Now other agencies too have started helping Nepal in this sector. With their cooperation we have developed five destinations in the country where more than 10,000 visitors go every year - Kathmandu, Pokhara, Chitwan, Annapurna and Sagarmatha. The policy of the government has been to expand it to other areas. Therefore, the donors help is in line with our policy. But the donors also have their own priorities. The international aid comes mainly in the field of environmental preservation. So, the aid agencies use the term like "eco-tourism" because it justifies the aid in the eyes of their sources of fund. But sometimes the environmental conditions of the aid may be difficult for the local people to fulfil there, we have to be cautious.

There seems to be a lack of a national consensus on the attitude towards tourism industry. What do you suggest should be the major points of such a consensus ?

In fact, the people sometimes have contradictory understanding about tourism. So we need a national level consensus and that should be spread across all the levels of society - from big entrepreneurs to village leadership and from political parties to bureaucrats.

How do you see the frequent disputes that crop up over local bodies imposing fees on tourists for entering certain premises ?

That is one example of not understanding the business properly and that is why we need a consensus. Local bodies are lawfully authorised to charge fees. But the complaint from entrepreneurs is about the timing. They are asking for pre-information, well in advance, so that they can incorporate such new fees and changes there in the quotations they send with the travel package now to future visitors. Such fees should be charged in such a way that they would not adversely affect the flow of tourists.

How to develop much a national consensus ?

It does not come in a year. The immediate objective of Visit Nepal-1998 was to develop such a consensus rather than to increase the arrival figure. Arrivals increase only in the following years of such campaigns and the need is to carry on with such campaign for several years continuously. That was how Thailand had done. Now you hear about "Destination Nepal Year". I was the one who first argued for this, though my idea was not to observe it as a "year". My idea was to launch a "Destination Nepal Campaign" by mobilising all the private and public agencies and allocating certain budget for the purpose every year for several years. The scheme included a three-hour educational package to educate local people about what tourism is, what benefits will accrue to the local people from tourism and what behavioural change they have to bring about to derive those benefits.

People complain that Nepal has become typed as a back-packers' destination. Do you think that this image must be changed as is being demand by some sectors ? Or it would be better to concentrate on cashing in that image ?

This is an issue of heated debate but limited only among the tourism sector people. Low-spending and high-spending tourists are identified only for marketing purposes. For example, there are differently priced pens available in the market and the buyers of Rs. 5 pen and Rs. 1000 pen are different and the producers of these items are different. The country needs to produce both. So is the case in tourism. I would say, it is even better if we receive low-spending tourists because their spending goes directly to the pockets of Nepalis who belong to the poorer sections of the Nepali society. Retention of the money spent by back packers is higher than that by the so-called high-spenders.

So, you mean to say that the debate over quality tourism is not so relevant ?

There is a misunderstanding that high-spending tourist is a quality tourist. You must understand that each class of the clients is different. The clients of a 5 star hotel are essentially different from those of a guest house in Thamel. If you ask me the definition of quality tourism, I would say that if the buyer receives enough satisfaction from the value he pays then he has bough a quality service. So, quality tourism should be measured against the level of satisfaction that the tourist says he derived from the money he spent. In this context, you may be aware that in the departure sample surveys conducted from time to time, majority of tourist who came to Nepal have indicated that they intend to revisit Nepal. You can also find that more than 40% of total arrivals are repeat visitors. That means, they are satisfied with what they received for what they have spent here. But it does not mean that we should not upgrade the quality of our services.

What about the situation in which 5 star hotels are selling their rooms for the prices of 3 star hotels ?

That is related to pricing and the price for a product is determined by supply and demand. When the arrival was growing at 6 or 7% per annum, the hotel rooms increased about 20% per annum. Now, we have rooms enough to accommodate above one million tourists, but the arrival is less than half a million - thus the average occupancy is naturally well below 50% in hotels.

I think, the hotels here have to go for developing their respective brand. A 5 star hotel must be an international 5 star, and it should target 5 star clients. But our 5 star hotels are targeting lower than 5 star clients who naturally would bargain for less than 5 star price. Take another example.

A consumer of 555 cigarette would not accept any other brand irrespective of its quality. Our hotels have not been able to create such brand image and product differentiation. May be, the foreign management companies that look after the marketing of Nepali properties (including 5 star) prefer to go for mass marketing than for product differentiation. Those non-star hotels who have gone for product differentiation are selling their rooms for prices higher than what the 5 star hotels are selling their rooms for.

The present situation when judged by the arrival data is considered to be such that Nepali tourism business has hit the bottom and therefore it is only to grow. How is your view ?

If you analyze the data over the last 40 year and plot them on a graph, they present an erratic trend. But I regard the dips, not the peaks, as the indicators of our strength. In 1993, the figure was very low, but it started going up from 1994. Unfortunately, soon after VNY-98, we started experiencing a downward trend and now we are at a very low point. But I think it is a transient phase and soon the curve will start going up. But how soon the upswing starts and how fast it goes will depend on how well NTB manage to take a pro-active role. At present, you hear that the decline in tourist arrival is due to the deteriorating security. But I don't accept that. I think the more damaging has been our withdrawal of long haul flights to Western Europe. We are not providing opportunities for those tourists in Western Europe and North America who are willing to come here.

Why is it so ?

You hear two contradictory statements about tourism in Nepal. A foreign tour operator who is selling Nepal and other destinations says: "I can't sell Nepal, it is expensive". But a Nepali hotelier or tour operator says: "We're selling so cheap that we're getting only back packers". The anomaly is because of high airfare to Nepal. If a US national plans to visit an Asian destination with a budget of US$ 1,500, he will have to pay as airfare US$ 1,200 to come to Nepal and US$ 700 to go to Thailand.

So, if he comes to Nepal his spending here will be only $ 300 while it will be $ 800 if he goes to Thailand. This is because of infrastructure limitations. Wide bodied aircraft that carry large number of passangers and fly long distance find it uneconomical to serve to Nepal. The solution is in either subsidizing the national airline in serving the uneconomical routes or in developing an alliance with other international airlines that come to nearby airports in India or elsewhere so that the tourists get quick and reliable connectivity to Nepal. The longer term solution is to develop an alternate international airport. NTB should take necessary leadership in this and develop a suitable mechanism.

What if the efforts now get concentrated in adventure tourism because the situation as is being publicized may be suitable for such market segment ?

It feel that we do not need to create motivators for the tourists to come here. These motivators are already there from ages in the form of natural, archaeological and cultural assets. Second, people are hospitable, not xenophobic. Third, tourism does not need much infrastructure. Over 25,000 people go to Mt. Everest base camp every year though there is no road.