Tourism Niti

Chanakya

The Indra Jatra heralds the beginning of the long tourist season of Nepal. However, this year there were fewer visitors in Basantapur viewing the jatra or revelling in Thamel. Nepali tourism is at the ebb reminiscent of 1989 the year of trade impasse with India. The future of tourism this year still looks uncertain as international and national events are contributing negatively. The events in the United States are going to affect global air travel and tourism which will certainly have an impact on destinations like Nepal.

Nepal's problem with tourism lies beyond what has happened in the last couple of months. There has been no understanding of this industry at any level relegating it to a business that everyone conducts without strategy or vision. It needs to be accepted that tourism is the first industry to be hit in case of recession or political uncertainty therefore one needs to analyse the risk factors in a different manner. The margins in the industry are low, be it in hotels or travel arrangements, therefore the affect on the volume leads automatically to losses in business. The effect on tourism has further implication on the businesses that work on backward linkages.

Tourism in Nepal has been plagued by many problems. The supply of hotel rooms is three times the demand leading to price cuts. The revenue of hotels are very low compared to the capital that has been employed leading to a situation where earnings can just manage operating but leaves and financial costs not serviced. The increased bargaining power of the labour has led to the industry being saddled with higher costs.

This situation has been compounded by lack of destination marketing. No one is going to come to Nepal just because Mount Everest happens to be here. If   Mecca, Jerusalem and Kumbh can receive millions of visitors why not Lumbini? The inauguration of a Buddhist Temple in Malaysia can receive half-a-million tourist in a week, then why not Lumbini?

The problems in tourism can be attributed to both myopic vision of the government as well as immature private sector. The government has been operating an ailing airline and does not want to get out this graft-fuelled business. This has been one of the paramount reason for stagnation. The way the Nepal Tourism Board evolved in reality as a body dominated by government has further extinguished whatever sparks of hope were there for in ushering new vistas of quality tourism. Government has done nothing to promote tourism. On the contrary, repetitive ad hoc actions have only further dwindled the potential. Private sector has also faulted when opportunities opened-be it the opening of China or opening of international routes. They have limited focus and save a couple of firs, they have failed to grow into credible institutions. Price-cuts and ineffectiveness of trade bodies to correct supply and price situation has made private firms to fight personal battles in an industry that is not doing so well. Further, their resistance to international players has not provided the right impetus for growth of tourism related services. Till these issues are resolved, there is little that the tourism industry can gain in the long run.