Tourism (Businessage Monthly)

Branded Cheap Destination

Nepal’s earning per tourist arrival is the lowest in South Asia and, worse still such earnings are steadily going down

-By Navin Singh Khadka

If a tourist faxed a letter to his Kathmandu based tour operator demanding one-week’s holiday package worth 5,000 US Dollars, guess what would happen? Believe it or not, the travel agent will find himself in a tight spot. Why? He would have a tough time preparing itinerary for the high bracket would-be visitor in this Himalayan Kingdom.

That with a reason: Nepali tourism industry is abundant with cheaper products. Whether it is hotel, tour, trek or you name it. Rampant cut-throat competition has sent the price of all the travel components to an all time low. One day’s rafting package, for instance, that cost above 80 US Dollars till the early 80’s now has swooped down to not even 20 US Dollars.

A classic setting for any travel agent to scratch his head while preparing the holiday package that demands tourism products with higher price tag.

And so, no wonder why Nepal has already been branded as a cheap destination in the international tourism market. More so, at a time when other SAARC countries are selling high value tourism.

According to a World Tourism Organization (WTO) report, with 910 US Dollars in average, South Asia has one of the highest receipts per tourist’s arrival. "But Nepal has not been benefiting from this trend as it earns 401 US Dollars per tourist per visit.

"In Nepal’s case, annual tourism earnings seem to be declining resulting into negligible 3.9 percent share and ranking fifth after India, Maldives, Iran and Sri Lanka. It is due to less expenses by tourists in shopping and entertainment activities and concentration of tourism activities in peripheral areas."

In 1995, Nepal’s share of total tourism receipts was 5.5 percent. By 1996 the figure dropped to four percent. And last year, when gross foreign exchange earnings were recorded a little above 100 million US Dollars, the market share came down to an all time low — 3.9 percent.

After Visit Nepal Year 1998, the officialdom tried to paint a bit of a rosy picture. Though the tourism extravaganza of 1998, that had the target of ushering in 500,000 tourists, was still short of 40,000 tourists to attain its goal, Nepal Rastra Bank (NRB) showed that the revenue had gone up in that year.

With a whopping increase of 32 percent over the 1997 record, the gross foreign exchange earnings from tourism went up to 152.5 million US Dollars in 1998, according to NRB.

Going by the previous records, the abrupt rise on the earning does not appear reasonable. 1997 saw an increase of 7.2% and yet the foreign exchange earned then (116 million US Dollars) was dubbed as a decline of 0.2 percent than that of 1996. Even the average length of tourists’ stay in the two years — 1997 and 1998 — has remained the same.

Add to that the decreased number of inbound tourists that Royal Nepal Airlines Corporation (RNAC) carried during 1998. While international carriers like Thai, China Southwest Airlines, among others flew in 35 percent more tourists in 1998 than in 1997, the national flag carrier’s record declined by 2.9 percent last year.

The national airline contributes a substantial sum of over 50 percent to the total forex earning from tourism annually.

With these facts the only plausible explanation for the "unnatural" growth in the tourism earning of 1998, could have been the increase in the number of quality tourists. But that too has not happened.

Exhausted with the cut-throat competition among themselves, business entrepreneurs long to receive upper bracket higher clients — a rare species in Nepal’s travel trade. "Since cut throat competition is still on the rise, the remarkable growth in the tourism earning does not appear natural," says Yogendra Shakya, former president of Hotel Association Nepal (HAN).

Some government officials point at the increased number of trekker and mountaineers — from 91,525 in 1997 to 112,644 in 1998 — as a reason behind the growth in the total forex earnings. Trekking Agents’ Association Nepal (TAAN) and Nepal Mountaineering Association (NMA) too have recorded an increase in the number of inbound adventure tourists.

"But the increase in trekking and mountaineering alone does not justify the mammoth growth in gross earning," says Narendra B.C., former General Secretary of TAAN. "At least, trekking and mountaineering agents have not experienced that remarkable growth in their earnings."

So, what sent tourism’s earning spiraling last year? Different theories are on offer. One possibility is that tourism earning in the past might have also surged as it happened in 1998 but the fact could not be recorded.

Reason? Unlike in the recent days when exchange rates of foreign currencies have stabilized and black marketing has remarkably gone down, in the past entrepreneurs used to either hoard money or deposit their earning outside the country through ‘hundi’.

The "good news", however, has not been of much for Nepal at a time when it is performing poorly in the region. India has a lion’s share both in tourist arrivals and tourism receipts in South Asia. It had 51.1 percent of the total arrivals and 74.5 percent of total receipts in 1997.

Even as a small island country, Maldives, according to the WTO report, has witnessed annual tourist arrival growth of 10 percent and its tourism receipt has gone up by 20.2 percent.