Nepal’s hotel industry struggles for survival amid pandemic

Many hotels in Nepal have started laying off staff as the hotel industry has been struggling with the difficult situation created by the COVID-19 pandemic.

The top-notch hotels like Hyatt Regency Kathmandu, Vivanta Kathmandu among others have started cutting down on staff.

According to Mukti Dahal, general secretary of the All Nepal Hotel Casino and Restaurant Workers’ Union, the Hyatt Regency has laid-off 17 management level staffers in the initial and 40 others in the lateral stage while the Vivanta has terminated 16 staffers.

Govinda Pariyar, PR manager of Hyatt informed that the hotel had terminated the 17 staffers at the managerial level while notifying them with prior one month notice as per the labour laws. However, Pariyar denied that 40 others were laid off. "It is not true that hotel has fired 40 staffers. Nevertheless, due to zero occupancy, the hotel has launched a voluntary retirement scheme (VRS) and is retrenching nine staffers between ages 45 to 58 in the face of crisis," Pariyar said.

"The main revenue source of hotels is generated by tourists from Europe, America and India, and until the vaccine is fully developed and tourist arrivals begin, we are operating the hotel with limited staffers," he added.

The Nepalnews tried to contact Vivanta for verification of the lay-offs but the hotel did not respond to calls.

With the easing of the lockdown and most sectors trying to get back to work, the hotels have been facing huge challenges with a few international tourists. The tourism and hospitality industry has been facing its unprecedented hurdles due to the uncertainly created by the pandemic and lockdown restrictions in countries across the globe.

The Hotel Association Nepal (HAN) on July 19 last year signed an agreement for uniform payout structure with the trade union to avoid mass layoff. As per the agreement, all staff would get the same amount of salary even if there was no work. However, the deal that became applicable from April 13, 2020 — about three months' time before the agreement — and continued till it expired on December 31, 2020.

A task force comprising six members from HAN, and two representatives each from the All Nepal Hotel Casino and Restaurant Workers’ Union, Nepal Free Hotel, Casino and Restaurant Workers Union; and Nepal Tourism and Hotel Workers Union was formed. A series of informal and formal dialogues were also held to review the uniform payout structure.

Binayak Shah, senior vice-president of HAN denied that staff were laid off by hotels in Nepal. "Since the agreement ended, we've been holding several meetings with hotel unions for a win-win situation for both parties. The hotels haven't violated the labour act. There will be temporary no work for the staff until things get sorted out with the unions," Shah said.

As per the earlier agreement, hotels agreed to pay salary even without work as they were getting a loan at 5 per cent interest from Rs 50 billion refinancing fund established by the government. “However, that policy is now ineffective, and also things are not on track despite the lockdown being lifted. So that agreement is no longer applicable and we are planning to restructure it based on work-based pay policy by rotating staff," Shah said.

General secretary of the All Nepal Hotel Casino and Restaurant Workers Dahal has said the hotel unions are very much against the 'no work, no pay' policy now being offered by HAN as it would create havoc among hotel workers. "We have had several official and unofficial meetings with HAN for two weeks, but we are yet to find a concrete solution.”

Nepal’s tourism industry is fighting for survival and the hotels have probably been hit the hardest. According to statistics at the Department of Immigration, only 230,085 tourists visited Nepal last year and most of them visited before the lockdown. Hoteliers who were optimistic about the resurrection of the hotel industry that was paralysed for some nine months hardly dare hope for the best in the coming days.

Even though the Department of Immigration started issuing tourist visas, hotel occupancies have not improved significantly and since tourist arrivals have not picked up and traveller’s confidence is still low, the road ahead is going to be long and hard for the hotels. Balancing revenue and cost of operations is going to be crucial for the survival of many.