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COVER STORY |
TOURISM
INDUSTRY Hounded by a plethora of
international and domestic problems, Nepal's prime foreign exchange earner is facing its
toughest times since the country opened itself to foreign tourists five decades ago. While
international tourism is showing signs of recovery after the September 11 attacks in the
United States, a deterioration in the internal security situation has shattered the hopes
of Nepalese tourism entrepreneurs. The optimism generated by Nepal's successful hosting of
the 11th SAARC Summit proved to be short-lived. Although the government has announced some
relief measures, many entrepreneurs consider them too little and too late. Unless there is
a significant improvement in the security situation, the tourism industry is likely to
continue on its downward spiral. By SANJAYA DHAKAL "Restaurants across Thamel are facing
grave difficulties," says Tek Chandra Pokharel, a prominent tourism entrepreneur. His
own restaurant, Rum Doodle, is struggling to survive. "We are finding it difficult
even to bear regular costs like staff salaries."
Hotels are doing no better. "The
average occupancy rate is around 20 percent these days," says Yogendra Shakya,
executive chairman of Ace Hotels and Resorts. According to him, such low level of
occupancy means that hotels are keeping tourists just to pay salaries and bills.
"Hotels generally involve heavy costs in repair, maintenance and upgrading. Its
carpets and decorations, for example, have to be changed and upgraded often. At present,
we are unable to meet such overhead costs." The situation in the airlines sector is
equally dismal. Many carriers have laid off employees or cut salaries. The Dutch airline
Transavia recently announced it would suspend flights to Kathmandu from March because of
lack of passengers. Travel and trekking agencies are facing the
same dilemma. "We are facing a lot of crises. We hope we can sail over these
difficulties soon enough," says Suman Pandey, president of the Trekking Agents
Association of Nepal (TAAN). "We are witnessing a historic
decline," says Tek Bahadur Dangi, director of tourism marketing and promotion at the
Nepal Tourism Board (NTB). Such a prolonged decline is unprecedented in the Nepalese
hospitality business's five-decade history. "From 1999 onwards, it has been a
continuous decline."
That was the year Indian Airlines
Flight 814 was hijacked from Kathmandu, which brought tremendous negative publicity for
the kingdom. Ever since, problems have been erupting at uncannily regular intervals,
sending the industry on a free fall. The already plummeting arrivals from India
tumbled further after the "Hrithik Roshan episode" in December 2000. The violent
protests in Kathmandu against anti-Nepal remarks attributed to the Indian actor —
which he denied making — took a perceptibly anti-Indian turn. This kept Indian
tourists away. Adding to the woes were strikes in hotels. Most hotel owners closed down
their establishments for a couple of days, refusing to bow to employees' demands. The year 2001 broke all records in terms of
problems. The tragic June 1 palace killings, a flare-up in Maoist violence, the September
11 terrorist attacks in the United States and the imposition of the state of emergency
dwarfed all previous problems. Although 2002 started on a positive note
— the country successfully hosted the 11th SAARC Summit and the United States eased
its travel restriction following the fruitful visit by Secretary of State Colin Powell
— the upsurge in Maoist violence could undo everything. Figures released by the NTB amplify how
seriously this series of sad events has battered the tourism industry. Tourist arrivals by
air in January 2002 have shown a continued decline. Compared to the same month last year,
the total number of tourists decreased by 47.59 percent in January 2002. Third-country
tourist arrivals were 9,559, compared to 20,611 last year, a sharp decrease of 53.62
percent. The Indian tourist component alone has decreased by 24.12 percent. Besides,
arrivals from the United States, United Kingdom and Japan have come down by 60.2 percent,
45.4 percent and 62.8 percent respectively. The total number of arrivals by air in 2001
decreased by 20.73 percent to 298,456 visitors, representing a loss of 78,047 visitors.
The figures indicate that third-country visitors declined by 16.52 percent and Indians by
33.04 percent during the period.
Pradeep Raj Pandey, chief executive
officer of the NTB, releasing the data on January 1, said, "Just as our efforts were
beginning to show positive results in arrivals during the first five months of 2001, a
series of unpredictable incidents at home and abroad marred the arrival scenario in
Nepal." "The September 11 terrorist attacks
aggravated a global economy that was already in decline and the tourism industry
throughout the world had to face a downturn. Nepal is no exception," he added.
"Tourist arrivals in Nepal were quite satisfactory up until the second quarter of
2001. During the first quarter, arrivals were up by 15.73 percent. And in the second
quarter, they were down by 16 percent. The decrease in the second quarter was largely a
result of drastic decline in June, which was considered to be short term. However, the
performance of the third quarter was discouraging, showing a further decline by 28
percent. This decline continued sharply until the fourth quarter." Multiplier Effect Tourism is one of the few industries where
the trickle-down effect is quite apparent. A single hotel can result in a chain effect.
"While tourists come and stay in hotels, the employees may want to stay and eat
outside. So it triggers investment in small restaurants, lodges and whole lot of other
facilities around the hotel," says Shakya. Besides, from vegetable vendors to
florists, and from plumbers to guides, many people get jobs. The multiplier and chain
effect of the decline in tourism is beginning to be felt. As hundreds of thousands of
people, directly or indirectly, depend on this sector for their livelihood, its cost on
the national economy is significant. Shakya says this is the reason why the
government, which was not too keen on tourism, is stirring up to address the problems of
the sector. "They now realize the importance of tourism on the national
economy." A slump in tourism will not only affect a
five-star hotelier but also small-time vendors in as far-off places as Beni or Mustang.
"I read some article that even beggars are not getting money these days," says
Shakya. According to the World Tourism Organization
(WTO), 10 people get jobs if one tourist comes to a country. This equation can have a
dramatic effect on any country's economy. For a country like Nepal, which has next to
non-existent export industries, tourism offers tremendous potentials. "But it all
boils down to one thing. Unless we have our own house in order, no tourist is going to
come here," says Pokharel. Government's Relief Package The government recently came up with
various policy decisions to reinvigorate the industry. The package includes a waiver of
royalty for foreign documentary production, the opening up of restricted areas in six
districts to foreigners, and exemption of visa fees for a limited time, among other
things. The government has also introduced a single-window policy to issue license for
those interested in filming the country's scenic wonders. A producer will be granted
permission from the Ministry of Information and Communication, doing away with the
previous cumbersome process of having to go through several agencies. Royalty for filming a documentary at Upper
Dolpa and Upper Mustang has been reduced to $5,000 from $40,000. In response to demands
from tourism entrepreneurs, the government has opened up restricted areas like Limi, Byas,
Olangchungola, Nangpala, Kimathanka and Kandadhuli to tourists. The government has also
decided to waive visa fees for visitors who stay for one day in Nepal from January 1 to
July 15. The existing three visa groups have been reduced to the single- and
multiple-entry categories. The charge of single-entry visa has been
fixed at $30, which would be valid for 30 days. The fee for a multiple-entry visa, valid
for five months, has been fixed at $50. The government opened 103 new Himalayan peaks to
mountaineering, taking the total number of such peaks to 263. Climbers on peaks under 6,500 metres will
no longer require liaison officer with effect from upcoming spring season (March 1, 2002).
The services of liaison officers will not be required on 89 peaks. Besides, the government has decided to
exempt royalty for ascending certain peaks. It recently announced partial and total
exemption of royalty on 60 peaks. The announcements were made with a view to promoting the
trekking and mountaineering sector in connection with the Destination Nepal Year
2002-2003, the golden jubilee celebrations of the successful ascent of Mt. Everest and
International Mountaineering Tourism Year, 2002. Although tourism entrepreneurs have
welcomed these steps, they say it is too little and too late. "Such decisions should
have been taken long ago, and in normal circumstances," says Pokharel. Pandey says
that the new moves would help the trekking and mountaineering sector. Addressing a program organized by TAAN to
mark Lhosar festival recently, Minister for Tourism, Culture and Civil Aviation Bal
Bahadur KC said, "The government is ready to help this sector in any way it can. I
urge entrepreneurs to come forward with suggestions." China Enlists Nepal, India Relaxes
ID Procedure Recent decisions by Nepal's northern and
southern neighbors could go a long way in boosting the sagging morale of the country's
tourism sector. By allowing Indians under 18 years of age traveling to Nepal by air to do
so on the basis of their school ID, the Indian government has removed a key barrier that
has existed since 2000. After the Indian Airlines hijacking, the Indian government made it
mandatory for its citizens to produce ID cards like passport, voters' card or ration card
when coming to Nepal by air. "Indians travel in a family and if
their kids can't come, parents would cancel the trip. Now this decision will resolve this
problem," says Dangi. Entrepreneurs say Indians spend more than other tourists do. As
Nepal's closest neighbors, Indian tourists will always play a major role. Last year, China enlisted Nepal as an
out-bound destination for its citizens. China is one of emerging global economic powers
and last year 10 million of its people went for overseas travel. Tapping even a small
section of the Chinese market can revive the whole tourism sector of Nepal. The Nepalese and Chinese governments
recently signed a memorandum of understanding (MoU) on the implementation plan for
outbound travel by Chinese citizens to the kingdom. The MoU has provisions regarding visit
programs and procedures for Chinese tourists. As per the agreement, the Chinese tourists
have to visit Nepal in groups comprising at least five individuals through travel agencies
recognized by the two governments. Beijing has granted recognition to 67
travel agencies for managing tours of Chinese nationals. The Nepalese government would
also recognize the same number of travel agencies for handling Chinese groups. But
entrepreneurs say the Nepalese side needs to do its homework better in order to profit
from the Chinese decisions. "The ball is in our court now and we must be prepared to
handle Chinese tourists to maximum benefit," says Shakya. The government has also decided to
celebrate Destination Nepal Year 2002-2003, International Year of Mountains 2002, and
Golden Jubilee Celebration Year of the successful ascent of Mount Everest 2003. The main
objective of these events is to help Nepal develop its image by showcasing premier events,
especially in the mountain tourism sector. But unless we put our house in order, no
tourist will come, no matter what attractions we offer. "Until and unless the
security situation improves, all our efforts could go in vain," says Dangi, a
sentiment shared by Pokharel and Shakya. The revival of Nepal's tourism industry,
therefore, would depend on its success in restoring peace and security. ‘We Don't Know How To Capitalize On Good Things’ — Yogendra Shakya
Yogendra Shakya is
one of the prominent tourism entrepreneurs of the country. Executive Chairman of Ace
Hotels and Resorts, owner of hotels like Ambassador and Club Himalaya Resort, Shakya spoke
to SANJAYA DHAKAL about the present situation in the tourism industry in the country.
Excerpts: How do you assess the current
depressing scenario in the tourism sector? In my entire 30-year career, I have never
felt the sector reaching so low. We were already suffering from over-supply even when the
tourism figures were good in 1999. Then, the average occupancy rate of our hotels was only
40 percent. I am talking from the point of view of hotels. Our hotels can cater to almost
1.2 million tourist, whereas we had just over 400,000 tourists in 1999, which was
considered a good year for tourism. The year 2000 witnessed about 13-14 percent fewer
visitors than 1999. And in 2001, arrivals came down further by 20-24 percent. So, just
imagine the average occupancy rate in hotels today. They have come down to around 20
percent. Such low occupancy is not going to service even our costs. Hotels are just
keeping tourists to pay salaries and bills. The government recently opened up a
few more peaks and relaxed visa and other regulations as part of a package to stimulate
tourism. How has the industry received this? I know that the government is showing signs
of concerns. We have always been telling the government to be open-minded about helping
tourism because we are competing with the most developed countries. So, we always have to
act and behave fast. Everybody is eyeing tourism. Our decision-making has been very slow.
But I think with this decline, not only the government but also the common man understands
how important this sector is. Now they realize when tourists don't come, it is not only
hotels or trekking agencies but the whole country that suffers. I read some article that
even beggars are not getting money these days. Because they are concerned, the government
recently introduced the relief package. However, these measures are not medicines, but
merely pain-killers. The whole tourism sector will have to get together and develop
products that include roads and infrastructure. We have make our tourism products more
exciting, be it sight-seeing, rafting or anything else. The Indian government has decided
to relax its ID requirement for citizens below 18 years of age traveling by air to Nepal.
How would this affect tourism? With the past rules, it was very difficult
for children up to 18 years of age to travel by air to Nepal because they don't have
voters' ID, or citizenship or ration card. I hear that the home secretaries have agreed to
allow them to travel by their school IDs, too. This is a very welcome step and I hope this
new rule is implemented quickly. We get many families coming from India and unless their
children can come, the parent will not. Indian tourists will always play a major role in
our country, because they are right next to us. We also need to develop surface routes to
lure more tourists from India. We could develop attractive packages for tourists coming by
land from, say, Delhi or Mumbai. Maybe we should have our own Everest Express train to
cater to them. We should talk with the Indian government to come up with such packages. It
will also be a very nice gesture on the part of the Indian government. How will the tourism sector benefit
by the opening up of Nepal to Chinese tourists? I think we have to do our homework more
than the Chinese. We were the ninth country to have signed a memorandum of understanding
with the Chinese government. But follow-up on our part was slow. That is why we are
already 27th in the list of out-bound destinations for Chinese. Others have come and
already gone into action. It seems we have missed the bus because now Chinese tourists
have a variety of choices for travel. If we don't complete our homework, work out the
details, the charm of signing the MoU as the ninth country will fade away. Also, among
Asians, there is this mentality of traveling to America and European countries. We have to
make our packages interesting to lure the Chinese. What kind of marketing do we need
in the international sector? Our biggest problem in marketing is that we
have not been able to go to the actual consumers. We have always been trying to convince
the middlemen, i.e., travel and tour operators. Of course, it is important to convince the
middlemen, but they can only work so much. The consumer has to be excited. It is easier
said than done because to go to consumers, we have to go on massive advertisement through
the international media, which we cannot afford. The only way we can reach the consumers
is to try and get international newspapers write on different subjects like Kumari,
Gurkhas and Mt. Everest and peg ourselves with these subjects. Article like Honey Hunters
of Nepal and films like Caravan and Everest Imax go a long way in enticing consumers.
Through gimmicks, we can put ourselves on the minds of consumers. Recently, there was a
write-up in Time magazine about Nagarkot. They even mentioned the Club Himalaya, which was
fantastic publicity for us. One thing I don't understand is that, while we made such a lot
of noise when Newsweek once wrote "Bye, Bye Shangrila," there was silence
regarding the Time article. We need to highlight our positive aspects more often. We don't
know how to capitalize on good things but are very sadistic talking about bad ones. How is the Nepal Tourism Board
(NTB) promoting the country overseas? I myself am a member of NTB. With the NTB,
the concept was to place the private sector in the lead. It is a pattern followed in
Singapore and Thailand, as well. It is a concept where tourism self-finances its promotion
by getting certain income from tourism. In a poor country like Nepal, we cannot expect the
government to spend millions in promotional activities. They will always have roads or
other development projects on their priority list. The reason why the board took a lot of
criticism initially was its PR problem more than anything else. Now, we are gradually
making efforts to be more interactive with the private sector. In fact, now for all our
promotion purposes, there is a team of private sector representatives who make the
marketing plan. The approach is more focused now in order to make optimal use of limited
funds. ‘Tourism Is Very Sensitive To What Is Happening’ —Tek Chandra Pokharel Tek Chandra Pokharel is a
prominent tourism entrepreneur who is involved in such sectors of the industry as hotels
and travel/trekking agencies. Pokharel spoke to SANJAYA DHAKAL on major issues confronting
Nepal's tourism industry. Excerpts: What is the present mood of tourism
entrepreneurs?
The mood is quite despondent. After
the September 11 incident, there was a dramatic drop in tourist arrivals. By November, it
was picking up. However, as soon as the emergency was declared, there was a dramatic drop
again. Right now, there are signs of tourism having picked up again, but it is very
sensitive to what is happening in the country, especially when armed violence is taking
place. There seems to be grave doubts about the success of the government in resolving the
problem. Political parties are fighting among themselves even in this situation. In this
scenario, I do not know what role the tourism industry can play to sustain the sector. We
cannot control politics or urge politicians to resolve problems through dialogue. Taking
up arms to bring about change in the country is not good. At the same, fighting
insurrection with arms alone would not be successful. Dialogue is necessary. This is where
the future of tourism and other industries of the country lie. We are currently living in
a situation that is not of our creation. How do you see the government's
recent attempts to revive the sector? Those were steps that ought to have been
taken long, long before — and in normal circumstance. They are welcome, but merely
opening a few more peaks, reducing visa fees and filming charge will not help now. For
example, we could have lured Bollywood here after the militancy flared up in Kashmir. But
our government increased royalty and film producers moved to Switzerland where cities
competed among each other to attract them by offering lucrative packages. In here, we
drove away whoever might have come. How can we lure back Indian
tourists? It is going to take a lot of time to
recover Indian tourists. Unlike before, Indians now have access to foreign exchange and it
cheaper for them to go to Bangkok than Kathmandu. Only RNAC and Indian Airlines flights
are available. Indian Airlines is simply not interested to reduce its airfare to promote
Kathmandu. We have to do a lot to lure them back. In fact, it makes better sense to start
marketing our tourism products in bordering Indian towns like Gorakhpur and Varanasi,
which we have neglected before. What about tapping the Chinese
market? The Chinese government decides what number
of Chinese can come here. It is done, no problem. China is going to be one of the biggest
markets in the global tourism market. We must start cultivating them right now. The
Chinese market is going to be beneficial in the long run. But others have had problems, as
Chinese tour operators are known for taking most of the profits back with them. Complaints
like these had come from places like Hong Kong, Thailand and Japan. Anyway, we have to be
ready to prevent it from happening here. Many of our tour operators have the experience of
handling tourists from Taiwan. They may be able to utilize that experience now. What should be our marketing
strategy in the international arena? Different strategies should be adopted for
different countries. For India, a lot of marketing needs to be geared toward cities
adjoining the border, like Gorakhpur, Lucknow, Patna, Siliguri and Varanasi. At the same
time, we should not leave out our original market, which we have lost, and try to recover
them. It has been our experience that Indian tourists spend more money than, say,
Europeans or others. They were profitable for our hotels and even marketplaces like Bishal
Bazaar. As for the Chinese, we need to find out what they want. Those with experience
handling tourists from Taiwan, for the last 20 years, can help in this. Tourists from
Taiwan, too, were not profitable initially. Now they have more foreign exchange at their
disposal. Earlier, some of them used to bring cameras and watches, sold them here and used
the money for traveling. Above all, we need peace in the country to lure tourists. We are
still keeping our fingers crossed that the problems will be solved amicably. Our economy
cannot sustain the cost of war. All our development efforts will vanish and we will be
back to where we were 50 years ago. Political leaders need to think of the country before
their personal ambition. It is very painful to tell leaders these things. It should have
been the other way round. ‘We Are Facing A Historic Decline In Tourist Arrivals’ — Tek Bahadur Dangi Tek Bahadur Dangi is the
Director of Tourism Marketing and Promotion at the Nepal Tourism Board (NTB). A person
with vast experience in Nepal's travel trade, Dangi spoke to SANJAYA DHAKAL on the current
state of the sector. Excerpts:
How do you assess the present
situation of the tourism sector? Due to many national and international
reasons, the sector is not doing quite well this time compared to previous years or
previous seasons. So, tourism entrepreneurs are not too enthusiastic. But they are not too
pessimistic either. They have very good prospects. Yes, presently they are facing
problems. Tourism is declining even in the international sector after the September 11
incident. In addition, Nepal is facing many domestic problems, which definitely has not
helped the country's image. Thus, we are having low arrivals of tourists, resulting in
many difficulties for entrepreneurs. What is the extent of the decline? Well, it has come down by around 22 percent
compared to last year. In Nepalese tourism, it is a historic decline as it is a continuous
decline for the subsequent years. There was a decline in 2000 and again in 2001.
International tourism is also facing a decline but it is more here because we have had so
many domestic problems. But again, there is a projection that international tourism will
pick up beginning mid-2002. Therefore, if we get things better at home, we can have good
progress. The government has made moves to
reinvigorate the sector by relaxing visa fees and opening up a few more peaks. How would
these measures affect the industry? The government has taken a lot of decisions
that would have immediate and long-term impact on tourism. For example, new trekking and
mountaineering areas have been opened, filming fees have been reduced, visa fees have been
simplified and some royalties on mountaineering have been reduced and waived. All this
will definitely create an immediate impact, as it provides new incentives. The government
has very recently declared the Destination Nepal Campaign (DNC), which is meant for at
least five years. Within this campaign, there will be collective efforts by the government
and the private sector in product development and international marketing. How is the NTB working to lure
Indian tourists? After the recent decision by the Indian
government to relax the requirement of ID for under-18 tourists, a barrier has been
overcome. Basically, Indians travel in a family to Nepal and if their kids face
difficulties, the whole trip is cancelled. Therefore, the recent decision is going to make
an important impact here. The DNC marketing mission will also create positive impact. We
are trying to promote Maha Shivaratri festival this year. Recently, the board went on a
marketing mission to southern Indian cities. How can we attract Chinese
tourists? China's acceptance of Nepal as out-bound
destination for its citizens is going to have a long-term impact. Last year, 10 million
Chinese tourists traveled abroad. According to the World Tourism Organization (WTO), China
will be the fourth largest out-bound market in the world by 2020. In that scenario, Nepal
being a neighboring country with so many unique tourist attractions like mountain flights,
white-water rafting and jungle safari, we have a lot of potentials to lure them. If we
make an integrated approach in terms of marketing and accessibility, we stand a good
chance of benefiting a lot. The board participated in tourism fair CITM in Kunming in
October last year and we have invited three, four journalist groups from China. We have
also invited China's central TV for a familiarization trip in March. Besides, we are also
planning a chain of activities to promote tourism in China. In terms of catering to their
taste, we have published booklets and CD-ROMs in Chinese language. The board is also
conducting training for Chinese tourist guides. What kind of marketing strategy has
the NTB developed? We are concentrating on 12 countries
categorized into three groups — primary, secondary and potential. We don't go
everywhere. In the primary category, we have five countries, India, USA, Japan, UK and
Germany. In the secondary category, we have five countries, France, Spain, Italy,
Netherlands and Australia. China and the Middle East fall in the potential category. We
focus our attention accordingly. However, after the September 11, the travel trend has
shifted in a dramatic way. There has been a huge decline in long-haul travel. People are
now more interested in traveling within their region. There is still a fear of traveling
by air. I think Nepal should also start focusing more on countries nearby and those with
which we have direct air access, such as India, China, Hong Kong, Thailand, Singapore and
Bangladesh. |
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editor: spotligh@mos.com.np |
