Nepal Tourism Board scales back budget by 75 percent as revenue streams disappear
No tourist, no money. Nepal’s tourism industry has been gasping for air for the last five months after the virus obliterated the global travel trade, forcing the Nepal Tourism Board to slash its annual financial plan by 75 percent as its revenue streams disappear.
The promotional body’s board is expected to pass a drastically scaled back budget of around Rs400 million for this fiscal year on Monday, a far cry from last year’s Rs1.63 billion package.
Of the total amount, Rs170 million has been set aside for administrative expenses. More than 90 percent of the budget consists of unspent funds carried over from last year.
As the government is undecided about reopening the country to tourism with the Covid-19 case load showing no signs of abating, the tourism board has little hope of collecting funds from tourists.
“We are totally uncertain. We don’t know whether tourists will come or not this year,” Abdesh Kumar Das, a board member of the Nepal Tourism Board, told the Post. “The budget has been prepared cautiously focusing on a few priority programmes,” he said.
In the last fiscal year, the board approved a record Rs1.63 billion budget anticipating a surge in arrivals during the Visit Nepal 2020 campaign. Then the virus came and disrupted everything. In 2019, the country received 1.2 million tourists.
Every year, the Nepal Tourism Board prepares its annual budget based on estimated arrivals. But this fiscal year, which began in mid-July, it does not have a clue about potential visitor numbers.
The board, however, estimates that 206,000 tourists may visit Nepal this fiscal year or by mid-July 2021, which will bring around Rs200 million in revenue to the board.
Things became complicated after the Ministry of Foreign Affairs hinted that it would not be issuing on-arrival visas even after the government announced re-opening the country to tourists on August 17 by allowing scheduled international passenger flights to operate. The Health Ministry is also for regulating tourist movement.
Arrivals to Nepal since April have fallen to near zero due to the lockdown and border restrictions put in place to prevent the spread of the coronavirus, which has so far killed 75 people and infected around 22,972 people nationwide.
Run under a public-private-partnership model, the financially self-sustaining board collects a tourist service fee of Rs1,130, including VAT, from each departing foreign passenger at Tribhuvan International Airport, which comes to around Rs1.30 billion annually.
Around Rs200 million comes from Trekkers Information Management Systems (TIMS). Foreign tourists who wish to walk in the mountains are required to obtain a TIMS card by paying a fee ranging from $10 to $20 per person.
Santosh Pant, corporate director of the board, said they had to make unprecedented adjustments in the annual financial plan due to an unprecedented economic downturn.
“It’s not certain, but we can expect a few travellers to enter the country if the airlines resume operation,” he said, adding that the budget had been drafted on a conservative principle that at least few tourists would come.
According to Das, the board has cancelled all promotional activities in overseas markets, and spending on branding and marketing. “We cannot promote the country at this time. But we have allocated a budget to launch promotional activities as soon as the crisis ends,” he said, adding that some part of the budget will be spent on research and IT.
The Nepal Tourism Board’s budget crossed the billion-rupee mark for the first time in 2016-17 immediately after the 2015 earthquake based on tourist enthusiasm to visit Nepal. At that time, the board had passed a budget of Rs1.12 billion to rev up promotional activities and revive the country’s tourism industry which was knocked to the ground by 2015 twin disasters.
“There was a 40 percent growth in tourist arrivals in 2016-17 which significantly increased the income of the board,” said Deepak Raj Joshi, former chief executive officer of the Nepal Tourism Board. “Then in 2017-18 and 2018-19, arrivals increased by 25 percent annually.”
The situation now is obviously not normal, he said. “But we have to be ready with funds as soon as the world opens for tourism. We don’t know when it will happen, but we have to be well prepared for a massive promotion.” he said.
Joshi said that Nepal should provide incentives to big tour operators and airlines that bring a large number of tourists in a bid to encourage them. “And some funds are required for this purpose.”
According to Joshi, the board can draw from the Rs320 million crisis fund if the situation returns to normal. But Das said they were not using the crisis fund as it could be required when there is an emergency. “
Around Rs900 million collected from TIMS remains unused due to a dispute between the board and the Trekking Agencies Association of Nepal going back to 2014 over sharing the fees collected from foreign trekkers. Today published The Kathmandu Post