Valley hotels net record profits in 2017

February 15, 2018

The Kathmandu Post, February 15, 2018

Feb 15, 2018-The year 2017 was good to many star-rated hotels as it brought higher tourist arrivals, greater occupancy and bigger profits. Most hotels in the Kathmandu Valley have witnessed record profits, according to Hotel Association Nepal (Han).

Of the two hotels listed on the Nepal Stock Exchange (Nepse) which have published their financial reports for the second quarter ending mid-January, Oriental Hotels posted a sharp rise while Soaltee Hotel Kathmandu showed a drop. Oriental Hotels, which operates the five-star Radisson Hotel in Kathmandu, posted double-digit growth in net profit in the first six months of the current fiscal year 2017-18.

The hotel’s net profit amounted to Rs117.56 million, a jump of 15.29 percent year-on-year, according to the company’s analysis report.

The report said that the hotel’s total income swelled to Rs467.64 million in the second quarter, up 5.51 percent compared to the same period last year. Income has been satisfactory as of the second quarter, the hotel said. Undeclared strikes and infrastructure bottlenecks are emerging challenges for the industry, it said. “The country’s political situation still remains a challenge for the hotel sector.”

However, another listed hotel company, Soaltee Hotel Kathmandu, saw its net profit plunge 25.56 percent year-on-year to Rs76.94 million in the second quarter of this fiscal year. The hotel recorded a net profit of Rs103.37 million in the second quarter of the last fiscal year, according to the hotel’s report.

The drop in Soaltee Hotel’s profits has been attributed to the refurbishment costs of the rooms in the Himalaya Wing Block. The entire block was closed for renovation that resulted in a drop in revenue, the hotel said. The hotel recorded a 6 percent fall in total receipts to Rs685.47 million in the second quarter.

“We have modernized all the rooms and resumed operation,” the hotel said, adding that business activities in the first six months of this fiscal year had been satisfactory.

Taragaon Regency that operates the Hyatt Regency Kathmandu is yet to publish its report.

Meanwhile, arrivals to Nepal hit a new record in 2017 but remained short of the much ballyhooed target of 1 million individuals as national elections in November and December resulted in weaker-than-expected growth, the Department of Immigration said. The country received 940,218 tourists last year, up 24.86 percent from 2016.

Nepal’s hotel occupancy rate remained at an average 65 percent last year, according to Han. “The year 2017 was a productive year for the industry,” said Binayak Shah, general secretary of Han. This is the first time in many years that the average occupancy rate has touched 65 percent.

“Considering the huge supply of new accommodation ranging from guest houses to home stays, the 65 percent average recorded by star hotels can be termed good,” he said. 

In the hospitality sector, an occupancy rate of above 40 percent is considered ‘survival’, and a rate higher than 50 percent is termed ‘fair’. An occupancy rate of above 60 percent is ‘good’ and 70 percent and higher is considered ‘excellent’.