Cover Story (Spotlight Weekly)

TOURISM INDUSTRY
Scripting A Strategy For Survival

Reeling under harsh national and international circumstances, many restaurants, travel agencies and other tourism-related businesses are resorting to severe cost-cutting measures like forced leave and lay-off to survive until the next tourism season begins in September. But will the tourists return? Or, more appropriately, will the conditions in the country stabilize for them to do so?

By SANJAYA DHAKAL

Jeevan Bista (name changed on request) had been working in a reputable private airline company in Kathmandu for eight months. A month ago, he received a summons from his boss. Though he had been working fine, the management concluded that his performance was not up to the mark. They first asked him to take a transfer to another department, but later asked him to resign.

Though the management assured him of reappointment once business picked up, Bista was made to pack his bags and leave. "I was really taken aback with the speed and manner with which they fired me. It must have been the recession," said Bista.

Kiran Manandhar's experience is similar. An employee at one of the capital's five-star hotels, Manandhar was asked to go on forced leave. "I am sure I was made to take forced leave because there were no guests in the hotel," he quipped.

Like Bista and Manandhar, hundreds of people associated with tourism-related businesses are finding the going tough. Things have come to such a pass that recently there was news report that a boss of a travel agency physically assaulted a tourist guide when he approached him for remuneration.

Though they do not want to be named, senior officials of big travel agencies and restaurants privately admit that they are fighting for survival. "We would be glad just to be able to survive in these pressing times," said a restaurateur.

Many travel agencies, hotels and restaurants have engaged in sharp cost-cutting measures. The relocation of a reputable travel agency from Naxal to Dhapasi may not be a coincidence, though its management likes to equate it that way. The decline in the tourism industry has had knock-on effects on many other sectors of the Nepalese economy like airlines and catering.

On Hibernation

Though they don't like to admit it, even five-star hotels and reputable private airline companies are feeling the heat much like small-time travel agents or restaurateurs. "These days the only manner in which we survive is by hosting domestic conferences, seminars and parties," said a senior officer at a five-star hotel.

According to a senior entrepreneur, most tourism-related businesses have gone into self-imposed hibernation. Though none of the big institutions have formally closed down by going to the length of terminating their registration, have started to downsize and are merely surviving.

A reputed restaurant : Decreasing business

"Most of them are surviving on the hope that the next season would bring back the tourists," said Hari Man Lama, Chief Executive Officer of Incentive and Travels and Sansui Treks and Expedition.

The major tourist season in Nepal starts from September. The airlines, hotels, restaurants, travel agencies and trekking agencies are hoping that the worst will be behind them by then.

In fact, the tourism scenario of Nepal started to tumble since the infamous IC 814 hijacking from Kathmandu. The terrorists who flew the New Delhi-bound plane to Kandahar not only hijacked the Indian Airlines plane but also the entire tourism sector of Nepal, which after the Visit Nepal Year 1998, was registering an impressive growth.

Successive events only plunged the industry deeper into the morass. The "Hrithik Roshan episode" at the end of the year 2000, the hotel strikes and Maoist insurgency fueled the fire. The Hrithik Roshan episode occurred at a time when Indian tourist arrivals were increasing in the country. But the riots that broke out in the capital over anti-Nepal remarks attributed to the Indian film star - which he denied ever making - turned Indian tourists away.

"The industry was gradually coming back to normalcy. The Maoist activities had not done much damage, as tourists considered it as a political problem. But the royal palace massacre came as a brutal blow," said Lama. The subsequent surge in Maoist violence and the imposition of the state of emergency came as the last straw. But that was hardly the end of the troubles. The September 11 terrorist attacks in the United States and growing tensions between India and Pakistan ensured that long-haul tourists stayed away from the region.

Lama, whose trekking agency mainly caters to Japanese tourists, says the imposition of the state of emergency acted as a psychological barrier. "In Japan, the only time the government imposed an emergency was during World War II. When [the Japanese] hear of an emergency situation in Nepal, they are bound to think that something similarly terrible is occurring in Nepal."

The combination of national and international factors brought the tourism sector down by around 22 percent till March this year compared to 2001, according to the Nepal Tourism Board (NTB). The figure could be much worse, according to private-sector entrepreneurs. Hotels are registering an average occupation rate of under 20 percent, which is not enough to service their expenses.

But Nima Nuru Sherpa, vice-president of the Trekking Agents Association of Nepal (TAAN), says there is no need to be pessimistic. "The months of June, July and August traditionally form the lean season. So there is no need to worry if tourists do not come during these months. However, this year, because there was a Saga Dawa festival in Tibet, which is held every 12 years, many tourists did come to Nepal to go there," said Sherpa, who is the chief of Cho Oyu Treks.

"The Maoists' activities have not affected trekking that much. But because of reports that some were asked for donations in the Makalu and Manaslu routes, trekkers are keeping away from those places," he said.

The Chinese Dream

One thing that is firing up Nepalese tourism entrepreneurs lately is the prospect of welcoming droves of Chinese tourists. The sheer size of the Chinese market is enough to make anybody drool.

Thamel area : Vanishing vibrancy

The number of Chinese visiting foreign countries reached 10.41 million in 2000 and the number is growing rapidly each year. According to the World Tourism Organization (WTO), China will be the world's topmost destination and its fourth largest tourist-generating market by 2020.

Though Nepal is a close neighbor of China, only two percent of the tourists visiting the kingdom come from the north. So, the Chinese government's decision to enlist Nepal as an out-bound destination for its citizens has come as a welcome respite.

The Nepalese government recently included the yuan in the convertible currency list. This move is expected to attract Chinese tourists. But many think the Nepalese government has been too slow in tapping the Chinese potential. More than six months after China officially enlisted Nepal as an out-bound destination, the Nepalese government recognized 78 travel agencies for the purpose of handling Chinese tourists. The Chinese government had already recognized 67 Chinese travel agencies for the same purpose back in November last year.

Nepal had been granted 'Approved Destination Status' by the government of China last year. About two dozen countries have received such status worldwide and Nepal is the first country to enjoy the privilege in South Asian region.

Entrepreneurs say the Nepalese side needs to do its homework in order to profit from the Chinese decisions. "The ball is in our court now and we must be prepared to handle Chinese tourists with maximum benefit," Yogendra Shakya, a renowned tourism entrepreneur, told SPOTLIGHT a few months ago.

He expressed dismay at the apparent delay in tapping the Chinese tourists. "We had clear advantage as we were one of the first few countries to have been granted such status by the Chinese government. But now many other countries are ahead of us in tapping them."

With its rich cultural and natural heritage, Nepal could succeed in attracting Chinese tourists in considerable numbers. The prospect of Chinese tourists coming to Nepal has sent a positive message to the kingdom's sagging tourism industry. A number of Chinese restaurants have sprung up in the valley in anticipation of a surge in visitors from the north.

Thamel Looks Bland

Thamel is the tourist hub of the country. These days, the otherwise crowded lanes of the locality look deserted, as fewer and fewer tourists come.

There are many non-star hotels and restaurants in the Thamel area. And many of them are feeling the heat. "It is true that even big restaurants and hotels are finding it difficult to survive. Many of them have started downsizing. Some of them have sent off their employees on forced leave and so on," said Raju Shrestha, general secretary of Thamel Tourism Development Committee (TTDC).

The TTDC is responsible for promoting tourism in the Thamel area. It to organize food and street festivals until two years ago. "But now even those kinds of activities have not been held due to the severe decline in tourism," he said.

Shrestha himself owns Krua Thai restaurant in Thamel. Echoing the frustrations of entrepreneurs, he says: "We are in an extremely tight spot. We have already invested lot of money in this sector and we can't just wash our hands off. On the other hand, it is frustrating to just wait and watch the situation change from bad to worse."

Adding to the woes of entrepreneurs, they have to cough up the money to pay the rent. Property value in Thamel shot up by leaps and bounds due to the boom in tourism industry. But now the entrepreneurs are unable to pay the same amount of rent.

"Lately, the landlords have began to understand our problem. It is necessary they realize the importance of development of tourism for mutual benefit," said Shrestha. Only the return of tourists can bring back the charm of Thamel, he says.

The Next Season

For the tourism entrepreneurs exasperated with the free fall of the industry in the last few years, the forthcoming season holds the key to survival. There is not much steam left in the industry to sustain for much longer.

Unless the next season delivers, they could rethink their business. As things stand, there is little hope. The domestic and international situations seem adverse to global tourism. The fear of terrorist attacks have already prevented western tourists from venturing out, especially on long-haul travel. Add to that the always-fluctuating scenario in the country and it does not need an expert analyst to predict the tourist flow in the coming days.

However, there are entrepreneurs who believe the industry can bounce back. "It is this pessimistic attitude that has made the things worse. For how long do we continue to talk about 9/11, Hrithik episode and things like that," said Nima Nuru Sherpa, vice-president of TAAN. "We have to keep our internal situation under control and aggressively work towards luring tourists."

In fact entrepreneurs believe that Nepal should emulate the success of countries like Sri Lanka and Egypt. Both these countries suffered terrorist assaults in the past and have sailed over the difficulties due to shrewd and professional management. Both these countries made sure that positive news and true reports about their countries constantly reached their clients. �Similar tactics of continuously providing prospective tourists with information and true situation of the country would help restore Nepal�s image as well,� said an entrepreneur. Just recently, Nepal was included in the top 50 destinations in the world. Before that, English newspapers like Observer published opinion poll which showed Nepal was second most favorite long haul tourist destination after New Zealand. �Instead of just harping on 9/11, Hrithik episode and Maoist activities, we need to highlight such positive developments,� said Lama.

Just recently, the NTB came up with figures showing a 35 percent growth in tourist arrivals in June compared to the same month last year. Though last June provides no standard to compare with, since there were hardly any tourists coming here in the aftermath of royal massacre, even this news was good news to the sagging tourism sector.

"This is definitely good news for the tourism industry. Word of mouth has been our biggest source of publicity and it has worked in our favor this time as well. Word has got around that life in Nepal is normal and tourism industry is functioning smoothly," said NTB Chief Executive Officer Pradeep Raj Pandey.

"At the same time, our promotional and marketing efforts in major markets like India, Japan, China and Australia are also bearing fruit. If this growth rate were to continue, we will reach pre-crisis levels in the next few months," adds Pandey.

The NTB is presently working hard to make the Destination Nepal Campaign 2002-03 successful. �After the success of the Visit Nepal Year 1998 campaign, the government now is launching the DNC with the view to restore the country�s image and establish itself as the prime tourist destination,� said an entrepreneur.

Whether the optimism of people like Pandey and Sherpa is warranted will become clearer in the coming season. For the moments, tourism entrepreneurs have no option to running - and running hard - even if only to stay in the same place.