NATIONAL7Spotlight Weekly)]

What Next?

Despite the government’s move to bring hotels and restaurants under the Essential Services Act and the hotel workers’ decision to call off their strike, the tourism industry is yet to show a semblance of stability. Worse, nobody knows how long this uneasy calm will be maintained.

By KESHAB POUDEL

Apsara Sapkota performs traditional dances every evening at Bhancha Ghar, one of the well-known Nepalese-style restaurants of the capital, earning Rs. 5,000 a month. Sapkota, 21, an undergraduate, started her career in 1998 as a traditional Nepalese dancer. Coordinated by former Miss Nepal, Sumi Khadka, Sapkota’s group of six girls provides foreign visitors glimpses into Nepalese culture.

There are more than 1,000 dancers like Sapkota who have been making a livelihood by introducing foreign visitors to this facet of Nepalese tradition. Nigma Sherpa and Kanchi Tamang have another story to tell.

A gust house in Thamel : Bogged down by problems

They remained idle for a week when a trekking group cancelled their visit because of the strike called by hotel workers. As many trekking groups cancelled their trips in the wake of the hotel workers’ strike, Sherpa and Tamang lost their temporary jobs. As there are a large number of people who rely on the tourism sector, any disturbance or instability threatens their livelihood.

Even a minor disruption can turn the lives of people like Sherpa and Tamang upside down. Along with formal workers of the organized sector, tourism provides income opportunities for a large number of informal workers in the unorganized sector. The voices of these people have been ignored in the long-running dispute between hoteliers and hotel workers.

Nepal’s economy risks facing a negative multiplier effect if tourism industry continues to pass though difficult times. The situation is worse for the banking sector. As a major source of investment, disturbances in the sector are bound to have a significant negative impact in economic transactions.

Disturbances in Tourism Nepal’s tourism sector continued to grow by seven percent a year until the end of 1999. After the hijacking of an Indian Airlines flight bound for New Delhi in December that year, the sector has nose-dived. Although there has been a slight growth in third-country arrivals, the flow of Indian tourists has been reduced to a trickle because of the exaggerated and negative publicity Nepal received in the Indian media’s coverage of hijacking aftermath.

The resumption of Indian Airlines flights after a gap of six month brought some respite and Nepalese tourism officials and entrepreneurs were hoping to recover from fallout of the hijacking. However, the violent protests against anti-Nepalese remarks attributed to Indian film star Hrithik Roshan — which the actor assiduously denied ever having made — sent the wrong signals in the Indian market again.

"A mysterious succession of events has been hitting our ailing tourism sector," says Anil Pandey, general manager of Bhancha Ghar. "Whenever the industry tries to recover, someone injects it with a new dose of poison. Our industry is dying slowly. If things continue this way, Nepal’s tourism will never be able to recover."

A tourist trying to get through locked hotel : Access

Frequent ‘bandhs’ (general strikes) and other violent activities have further battered the industry. One the country started expecting relative normalcy, hotel workers announced their agitation over the demand for the imposition of a 10 percent service charge on tourists.

Effects of Disturbances

Because of periodic disturbances, Nepal’s economy is bracing for long-term impacts. As the number of tourists declines, many workers are being laid off. A sector that was among the fastest-growing sources of jobs has virtually frozen recruitment.

"The real effects of the one-and-a-half years of disturbances will be much higher than expected. Many small hotels have already started trimming down the number of employees," said a senior official at the Federation of Nepalese Chamber of Commerce and Industry.

According to official figures compiled by the Nepal Tourism Board, tourist arrivals by air went down by 10.61 percent last year compared to 1999. Indian tourist arrivals have declined by an average of 30 percent.

"My livelihood will be severely affected if the tourism sector continues to ail," says Sapkota. She says she cannot get her present salary in any other job available. "I am paid Rs. 5,000 to perform 35 minutes of dance every day. A decline in the number of guests means a reduction in my monthly income."

The worries of workers like Sapkota are understandable, especially in view of the limited job opportunities in other sectors. Hotel workers have resumed work after the government brought the hotel and restaurant sector under the Essential Services Act. Nevertheless, the strike held last November and the events of last week have tarnished the image of Nepal as a reliable tourism destination.

"The government decision to impose the Essential Services Act is a commendable step. I think the government has finally understood the importance of the tourism sector to the national economy," said Madhav Om Shrestha. In the last six months, the industry has lost more than a billion rupees of transactions. Each day of disruption costs Rs. 340 million, including Rs 5 million in VAT and Rs 50 million in other taxes."

Many blame hotel workers for creating uncertainty in the tourism sector. However, the workers defend their action as a legitimate effort to press their demand for a 10 percent service charge. "I don’t agree with the contention that our demand is responsible for the decline in tourist arrivals," says Bishnu Lamsal, coordinator of the Hotel Workers Joint Action Committee. "The country has been facing disruptions from many other sources, such as the Maoist activities and the overall deterioration in the law-and-order situation. We are always in favor of negotiations to settle our problems permanently."

The uncertainty is also harming other areas, including the rafting industry. "We have received many cancellations because of the uncertainty prevailing in the hotel sector," says Kumar Ranabhat, president of the Nepal Association of Rafting Agents. "Even after the truce, the situation remains unpredictable."

Economic Costs

According to a study, the strike hampered the business of 350 travel agencies, 400 trekking agencies 600 restaurants and 800 hotels across the country. The numbers of passengers on domestic flights also dropped drastically. As uncertainty hovers over the sky, the future of 1.5 million people employed in the sector remains uncertain.

A committee set up under the chairmanship of the Vice-Chairman of the National Planning Commission, Prithvi Raj Ligal, recommended the introduction of tourism service fees instead of service charges, but the workers are firm on their original demand.

The problem can be solved if the prime minister takes the initiative," says Dr. Narayan Manandhar, one of the consultants on the committee. "I don’t know why no one is taking any initiative."

Hoteliers, who argue that imposing the service charge would cripple the tourism industry, say they want a lasting solution. "We want to solve the problem for good," said Shrestha, executive director of Hotel Association Nepal.

Hotel workers, who are considering going to court against the government’s move to invoke the Essential Services Act, also wants some face-saving formula. Our doors are always open for negotiations, but the hoteliers are not showing any flexibility," says Lamsal.

The government, too, seems anxious to resolve the dispute expeditiously. "We want a permanent solution because these problems will hamper both hotel workers and hoteliers," Minister of State for Culture, Tourism and Civil Aviation Mahadev Gurung told SPOTLIGHT.

The dispute needs to be settled as soon as possible for Nepal to regain confidence in the international market. "We will take all necessary steps to reduce the negative impact on the tourism sector," Minister Gurung says. The national economy has already suffered immense damage from the disruption of the tourism sector. Even after the resumption of work, the tourism sector is yet to stabilize. For the time being, the workers can get some respite. Any new disruption would put the future of 250,000 workers in jeopardy.

The contribution of tourism to the gross domestic product of Nepal increased from 1.4 percent in 1983\84 to about 3.6 percent in 2000. The sector’s contribution in the increase of merchandise export was 32.8 percent last year compared to 34.1 percent in 1999. Its contribution was 50 percent in 1994\95.

According to a study, the tourism sector created 122,745 permanent jobs. This means it has engaged approximately one percent of the country’s total potential labor force. In 2000, the country earned more than US$150 million in foreign exchange.

"An important economic aspect of tourism is its linkage and relations with other sectors of the economy like textile, agriculture, gem, jewelry, arts, handicraft and culture," said Maheswor Bhakta Shrestha, a tourism expert.

"If things remain unchanged, Nepal will lose its image as a popular and placid destination," says HAN executive director Shrestha.

From a dramatic hijacking to exaggerated reports of bird hits at Tribhuvan International Airport to the violent response to remarks an Indian actor said he never made, Nepal’s tourism industry has passed through several painful phases over the last one-and-a-half years. Who knows what else may be in store?