Nepal’s hotels and restaurants making slowest recovery

A study released by the Central Bank on Wednesday showed that hotels and restaurants in Nepal are still making an effort to get back on their feet after the coronavirus disaster while most of the business sectors have moved to full recovery mode.

The third follow-up survey conducted by the Bank of Nepal Rastra in October reveals that transactions in the hotel and restaurant sector have risen to just over half of pre-Covid levels, reaching 57.2 per cent last month, compared to the national average of 74.7 per cent.

Last year, after Nepal imposed a total lockdown on March 24, hotels and restaurants saw their sales drop to 7% in June. Transactions increased by 18 percent in November after the lockdown was lifted in July and flights resumed in September.

The central bank survey showed that as of April 29, 2021, when the country imposed a second lockdown that lasted until September, sales of hotels and restaurants rose to 40.8 percent.

On September 23, Nepal canceled the requirement for a seven-day quarantine and resumed issuing visas on arrival to all vaccinated foreign travelers in a bid to bring the virus-ravaged tourism industry back to life.

Analysts say the scale of the damage to the country’s tourism sector will surely leave lasting scars.

“It may take years for the hospitality sector to fully recover,” said Binayak Shah, Senior Vice President of the Hotel Association of Nepal. Shah explained that the severity of this epidemic made it clear that restaurants and hotels would continue to suffer for much longer than originally expected.

Hotels said they had appalling occupancy rates in the peak season in November. Occupancy rates are still under 20 percent, according to industry insiders.

Nepal saw the highest number of monthly arrivals after Covid in October, pushing the total since the start of the year to over 100,000.

According to Nepal Tourism Authority data, Nepal welcomed a respectable 23,284 foreign tourists by air in October, but the number is still 90 percent below pre-virus levels.

The third follow-up survey was conducted by telephone from 24 October to 3 November.

The results are based on responses from 546 companies from across the country.

The central bank said the largest number of participants – 30 percent – were from the wholesale and retail sector, 17 percent from manufacturing and production, and 16.3 percent from the hotel and restaurant sector.

The study shows that average production and transactions for various economic sectors — agriculture, industry and services, among others — are 74.7 percent of their usual pre-pandemic level.

Nara Bahadur Thapa, former CEO of Nepal Rastra Bank, said that the average national production and transactions in various sectors which had reached 75 per cent of pre-Covid levels was already a positive recovery.

Although recovery has not occurred at a faster rate, the numbers show that a full recovery will take no more than a year. But this will depend on whether Nepal will witness a third wave of the COVID-19 pandemic, which is currently beginning to hit European countries.”

Nepal on Wednesday reported 305 cases of novel coronavirus in the past 24 hours, raising the number of infections nationwide to 82,004.

According to the central bank, the transportation sector recorded the slowest recovery after hotels and restaurants. Transactions in the transportation and warehousing sector were 69.5% of the level on happier days.

The highest recovery rate was observed in the minerals and exploration sector with its production and transactions reaching 93.3 per cent of pre-Covid-19 levels.

Transactions and production in the agriculture, forestry and fisheries sector were 79.3 percent of previous levels.

The survey shows that Nepalese industries and enterprises appear to be on track for a faster recovery with 87.2 per cent of businesses and industries resuming full operation.

The mineral and exploration sector, and the electricity, gas and water sector have made the fastest recovery, and companies in these sectors are now 100 per cent open. The survey revealed that 78.7% of hotels and restaurants were fully opened, while 21.3% were partially opened.

According to the survey, 88.9 percent of the construction sector is fully open while 87.1 percent of manufacturing is fully opened compared to pre-Covid levels.

The survey shows that large industries are almost completely open.

According to central bank data, 90.9 per cent of industries with capital over Rs 500 million are fully open while 88.4 per cent of cottage industries are fully open.

The World Bank said in its latest report that the first wave of the pandemic and its associated lockdowns have caused a significant contraction in economic activity, resulting in job losses in Nepal. More than two out of five workers reported either job loss or prolonged absence from work. A quarter of these jobs were unrecovered in late 2020.

Although men and women experienced similar losses at work, more female workers (30 percent) reported permanent job losses than male workers (23 percent).

Younger workers suffered the most of any age group, with 59 percent of workers in the 15-25 age group reporting losing their jobs.

The multilateral funding agency said manufacturing and service jobs were hit hardest by agriculture; But the number of wage workers in agriculture fell by half. Although the farm sector was least exposed to the crisis, one in three farm workers lost their jobs.

Recovery looks difficult, especially in the tourism sector. We do not have a common national strategic policy for recovery. Shah said. “The road to recovery will be difficult if we do not coordinate.”

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