HAN welcomes tourism-focused budget, Urges government to prioritize implementation

KATHMANDU: Hotel Association Nepal (HAN), the national umbrella body representing Nepal’s hotel and resort sector, has welcomed the tourism-related policies, programs and budget allocations announced in the national budget for Fiscal Year 2083/84, while urging the government to ensure effective implementation of the commitments.

In a statement issued following the budget announcement, the association expressed satisfaction that tourism has been recognized as one of the key pillars of Nepal’s economic transformation strategy. HAN said the budget’s emphasis on tourism development, private-sector participation and destination promotion could significantly contribute to economic growth, employment generation and foreign exchange earnings.

Private Sector Recognition Boosts Investor Confidence

The association noted that the budget’s commitment to working with the private sector as a major development partner sends a positive signal to investors and businesses at a time when economic activities remain sluggish.

According to HAN, encouraging private-sector participation in capital formation and investment will help revive business confidence and stimulate economic activities across the country.

“The government’s recognition of the private sector as a key partner in national development is a welcome step that can help accelerate investment and economic recovery,” the association stated.

Visit Nepal Year 2085 and Wellness Tourism Receive Praise

HAN particularly welcomed the government’s decision to declare Visit Nepal Year 2085 (2028/29) and the planned Wellness Year 2027, which aims to position Nepal as a destination for wellness, health and spiritual tourism.

The association said these initiatives could strengthen Nepal’s global tourism brand and attract higher-spending international visitors.

The budget also received praise for introducing several new tourism development concepts and destination-based programs, including:

• Development of the Nirvana Trail
• Koshi Tourism Corridor
• Integrated tourism circuit development
• Danphe Tourism Area
• Shaligram Tourism Route
• Mid-Hill tourism destinations
• Hill station development projects
• Expansion of the Great Himalayan Trail
• Conservation of monasteries in Manang and Mustang
• Provincial tourism corridor development

According to HAN, these initiatives have the potential to increase tourist arrivals, extend visitor stays and raise average tourist spending, which remains a major challenge for Nepal’s tourism industry.

International Airports and Aviation Reforms Critical for Tourism Growth

The association highlighted the importance of operationalizing Nepal’s two regional international airports in Gautam Buddha International Airport and Pokhara International Airport, which have struggled to attract sustained international traffic since their completion.

HAN stated that collaboration between the government and private sector to enhance operations at the airports could significantly improve international connectivity and tourist arrivals.

The association also welcomed budget commitments related to:

• Reforming and restructuring Nepal Airlines under a company model.
• Efforts to remove Nepal from the European Union’s aviation safety blacklist.
• Facilitating tourist entry through border checkpoints.
• Strengthening international air connectivity.

Tourism entrepreneurs believe these measures could help Nepal become more competitive in the South Asian tourism market.

Janakpur Wedding Tourism and Lumbini Development Highlighted

HAN also praised plans to develop Janakpur as an international wedding destination, leveraging its religious and cultural significance associated with the marriage of Lord Ram and Goddess Sita.

The association further welcomed initiatives related to:

• Greater Lumbini development
• Mountain biking tourism in Gandaki Province
• Himalayan tourism marketing
• Adventure tourism promotion
• Cultural and religious tourism expansion

According to the association, these programs can diversify Nepal’s tourism offerings beyond traditional trekking and mountaineering products.

Economic Diplomacy and NRN Collaboration Welcomed

The hotel industry also welcomed the government’s plan to promote tourism through economic diplomacy and greater collaboration with the global Nepali diaspora.

HAN said working with Non-Resident Nepalis (NRNs) could help expand Nepal’s tourism promotion efforts in international markets and attract more visitors, investment and business partnerships.

The association further praised the budget’s focus on:

• Technology adoption
• Artificial intelligence (AI)
• Innovation-driven development
• Good governance
• Anti-corruption measures
• Human resource development

These measures, HAN said, could improve business efficiency and reduce operating costs across the tourism and hospitality sector.

Concern Over Electricity VAT

Despite broadly supporting the budget, HAN expressed serious concern over the government’s decision to impose VAT on electricity consumption.

The association noted that hotels and resorts have increasingly shifted from imported LPG gas to domestically generated hydropower for cooking, heating and operations in line with Nepal’s clean energy goals.

Although hotels have been categorized by the government as productive industries, they still do not enjoy many of the electricity-related concessions available to other industrial sectors.

HAN warned that imposing VAT on electricity could significantly increase operational costs for hotels and resorts.

“The additional cost burden could weaken the international competitiveness of Nepal’s hospitality industry at a time when the sector is still recovering,” the statement said.

The association urged the government to reconsider the measure and provide relief to tourism-related businesses.

Domestic Tourism Promotion Needed

HAN also called on the government to strengthen domestic tourism by reactivating previously announced programs aimed at encouraging travel within Nepal.

The association specifically requested the revival of the government’s “Civil Servants Country Tour Program,” which encourages public employees to travel across Nepal.

It further urged authorities to remove restrictions that limit government conferences, meetings and official events from being hosted in hotels and resorts.

According to HAN, such measures would support domestic tourism, improve hotel occupancy and contribute to local economic activity.

Occupancy Rates Remain Low Despite Rapid Hotel Expansion

The association highlighted a major challenge facing Nepal’s hospitality sector: underutilization of existing capacity.

Over the past decade, Nepal has witnessed rapid expansion in high-quality hotels and resorts across major tourism destinations. However, HAN noted that average occupancy remains at only around one-third of available capacity.

Industry leaders argue that increasing tourist arrivals, extending visitor stays and encouraging domestic tourism are essential to improving profitability and ensuring sustainable returns on investment.

Call for Accountability in Budget Implementation

While welcoming the tourism-focused provisions of the budget, HAN stressed that implementation remains the key challenge.

The association urged the government to establish a system for regularly monitoring and publicly evaluating the progress of budget announcements and development commitments.

HAN said the first budget of the current powerful coalition government presents an opportunity to institutionalize time-bound accountability mechanisms to ensure that announced projects are actually delivered.

The association also called for lower tax rates and simplified tax structures on local agricultural products and small-scale domestic goods, arguing that Nepal’s hospitality industry could significantly increase consumption of locally produced goods if costs are reduced.

With tourism contributing significantly to employment, foreign exchange earnings and regional economic development, HAN said effective implementation of the budget’s tourism agenda could help transform the sector into a stronger driver of Nepal’s economic growth.