The Tourism Ministry has moved ahead with a plan to lease out an underutilised land plot belonging to the Civil Aviation Authority of Nepal (Caan) to build a five-star airport hotel under the build-own-operate-transfer (BOOT) modality.
The proposal to lease out around 91 ropanis of land in Sinamangal, Kathmahndu, was tabled at the Cabinet for its approval two weeks ago.
According to the Caan’s plan, the land plot could be leased for at least 30 years, after which the land and the hotel would be returned to the aviation sector regulator.
Caan officials said the move was aimed at making commercial use of the land which has been underutilised despite the prime location. They said the plan also seeks to facilitate tourism, offering accommodation to travellers passing through Tribhuvan International Airport (TIA).
“Building a luxury airport hotel near the country’s international airport would help promote tourism as well as serve transit passengers,” said Buddhi Sagar Lamichhane, joint-secretary at the ministry. He said the proposed hotel would be financially viable due to its ideal location and proximity to the airport.
Government officials said building an airport hotel under the public-private partnership model could create more value for Nepal’s tourism, and it could be a big source of revenue for the government. After the Cabinet’s nod, the Caan will hire a consultant to assess the feasibility of the project that includes annual lease rental payments and lease term. Caan plans to issue a letter of intent for prospective developers after the assessment is completed.
Tourism Ministry officials said a number of Nepali investors have expressed interest in leasing out the plot.
On November 7, 2013, the Finance Ministry had approved the Caan’s proposal after the Tourism Ministry gave its go-ahead in January, 2013. The proposal was then sent to the Cabinet seeking its approval. However, the Cabinet had returned the proposal and asked the Caan to submit complete details of the land. An Armed Police Force unit currently occupies the plot. The Tourism and Home ministries and Caan have agreed to relocate the APF unit to other location if the Cabinet approves the project.
There are currently nine five-star hotels in Nepal — seven in Kathmandu and two in Pokhara. Five-star hotels recorded an average occupancy of 61 percent last year, up from 58.85 percent in the previous year.
According to the Tourism Ministry, out of 523,453 room nights produced by the five-star hotels, 319,284 were sold. Despite the growth in room occupancy last year, the hotels are likely to see a sharp fall in occupancy this year due to the earthquake that saw mass departure of tourists.