Tourism earnings down despite higher arrivals

Foreign exchange earnings from tourism have fallen despite a rise in arrivals, length of stay, spending and hotel occupancy.

According to Nepal Rastra Bank (NRB), revenue from the travel trade dipped 13.2 percent in the first 11 months of fiscal 2011-11. Takings amounted to Rs 22.91 billion in the review period, down from Rs 26.40 billion in the same period in the previous year. In the whole of fiscal 2009-10, the tourism sector earned Rs 28.13 billion in foreign exchange.

"The tourist length of stay has increased while hotel occupancy was positive with improved tourist arrivals since last year, but the decrease in tourism income has surprised us," said Basanta Raj Mishra, past president of the Nepal Association of Tour Operators.

According to the Economic Survey, the average length of stay of tourists in Nepal increased to a six-year high of 12.67 days in 2010-11. Similarly, the survey shows that daily spending has climbed to US$ 46.73 this year from US$ 36.88 last year.

Entrepreneurs said policy makers should do some soul-searching on why income from tourism has been declining. The country's tourism income has not been evaluated on a scientific basis. Air tourist arrivals to Nepal has increased significantly since 2010, and a 25 percent growth was recorded in the first six months of 2011. Travel traders have blamed the fixation of Nepal Tourism Year (NTY) on attaining arrival targets and slackness in efforts to expand quality tourism for the fall in revenue.

"With the announcement of NTY, there is growing competition among travel agencies to increase the number of tourists rather than quality tourism," said Ram Kazi Koney, managing director of Gandaki Tours and Travels and past president of the Nepal Association of Travel and Tour Agents (NATTA). According to him, the country has become a budget destination affecting foreign exchange earnings.

NTY has been good to the hotel industry, bringing greater arrivals, higher occupancy and profits. Hoteliers said that average room occupancy has climbed to 60-70 percent from 40-50 percent in earlier years.

Hotel tariffs have been increasing 15-20 percent annually, and they have been maintaining their room rates even during the off-season.

With revenue falling despite improved tourist arrivals, NRB said that the issue was a serious concern. "NRB is studying the issue to find out why earnings from tourism have been declining," said NRB spokesperson Bhaskar Mani Gyanwali.