Hospitality businesses rely on cooperatives for loans, only 28% utilise bank credit

Kathmandu, Jan. 2

Less than one-third of all hotels and restaurants in Nepal have obtained loans from banks and financial institutions (BFIs), cooperatives and other individuals.

Of the total 142,223 institutions in the food and accommodation sector including hotels, restaurants, homestays, hostels, and party venues, only 28.4 per cent have utilised the loan facility, according to the National Hotel and Restaurant Survey 2080 conducted by the National Statistics Office (NSO) report which was published on Wednesday.

About 71.6 per cent don't have any outstanding loan facility during the survey period in the last fiscal year.

Loan analysis across the hospitality sector revealed that while most of the star hotels obtained loans, majority of homestays didn't. More than 80 per cent star hotels have obtained loans while the number of resorts using credit facility is 69 per cent.

On the contrary, only 18.2 per cent of the homestays have used the loan facility, followed by restaurant 26.8 per cent, hotels 33.8 per cent and catering and party venues 35.5 per cent.

According to the NSO report, there are 126 star and 11,919 non-star hotels/lodges. Likewise, Nepal has 126 resorts, 1,345 homestays, 1,047 hostels, 126,859 restaurants and 801 catering/party palaces.

Similarly, in terms of percentage, Sudurpaschim Province tops the list in loan utilization by hospitality business with 41.8 per cent obtaining the credit followed by 37.8 per cent in Madhes while in Bagmati only 23.5 such enterprises have availed of the facility.

NSO concluded there are 25,887 food and hospitality enterprises in Koshi, 11,740 in Madhes, 52,123 in Bagmati, 16,976 in Gandaki, 20,158 in Lumbini, 7,110 in Karnali and 8,228 in Sudurpaschim.

 

One-third firms in Koshi use loans from cooperatives

An interesting fact about loan mobilisation in hotel and restaurant sector is that a significant number of enterprises have obtained loan from cooperatives and individuals. Such number is significantly high in Koshi and Lumbini where 33.7 per cent and 31.7 per cent of them got their funds from cooperatives.

Likewise, 36.1 per cent institutions in Madhes have utilised loans from micro-finance companies while such number in Bagmati is just 6.4 per cent. In Bagmati, 17.9 per cent enterprises received loans from individuals followed by 12.7 per cent in Gandaki and 12 per cent in Koshi.

The country average of Nepal showed that 40 per cent of hotels and restaurants obtained loans from banks, 27.3 per cent from cooperatives, 13.5 per cent from micro-finance companies, 11.6 per cent from individuals, 5.7 per cent from finance companies and 1.8 per cent from other sources.

 

Hospitality contributes 1.96% to GDP

The accommodation and food service activities make a 1.96 per cent contribution to the Gross Domestic Product (GDP) of the country. However, a large number of such enterprises are micro-level businesses engaging only one or two individuals. Enterprises that engage more than 10 individuals are 2,568 while 103,401 businesses are run by only one or two individuals. The sector employs about 500,000 people.  

The hotel and restaurant sector survey happened in Nepal after a gap of 20 years. As it covered all types of hospitality and food enterprises across the country and analyses were broken down to the provincial level, the NSO termed it as the 'first integrated study on the hotel and restaurant sector'.

Published in The Rising Nepal daily on 3 January 2025.