Wednesday, July 20, 2011

Nepal Tourism Year 2011

Tourism, as a mainstay of Nepal’s economy, is growing because of additional attractions such as casinos, a host of adventure sports like Everest Skydiving and mountain biking in Nepal’s mountains and hills as well as international film and drama festivals. In Oct 2008, 50,567 tourists visited Nepal, with the arrival of Indian tourists up by 14 percent, thus making the arrival highest in the last 8 years. The Maoist insurgency that cost almost 13,000 lives in a span of 10 years (1996-2006), hijacking of Indian Airlines flight IC 814 in 1999, Royal massacre in 2001, King Gyanendra’s coup in 2005, all contributed to a decrease in tourist arrival. However, after the signing of Comprehensive Peace Accord in 2006 that ended the civil war, which made Nepal a democratic republic in 2008, has worked in favor for the tourism sector. About 6 percent of the total foreign exchange earnings in 2010 are expected to come from tourism.
International tourism receipts also grew to USD 944 billion in 2008. The H1N1 influenza virus outbreak caused a decline in tourists worldwide by 880 million with about 6 percent decline in international receipts. Although the World Travel and Tourism Council (WITC) has revised its forecast on a 2 percent rise in the real GDP growth, the tighten fiscal policy and debt servicing liability of the Western consumers is expected to bring down expenditures to its 2008 level by making the pace of recovery in 2011 rather slow in Asia Pacific region. However, the share of tourism in global economy is expected to grow by over 10 percent in 2011. Tourism will be a key driver to poverty reduction by creating an additional 66 million jobs by 2020, 50 million alone in Asia. This will make Asia Pacific region the second most important tourism destination in the world by 2020.
South Asia lacks conducive operating environment to facilitate and harness existing potential of tourism. This is why the number of visitors to this region accounted only about 1.1 percent of the global visitor arrivals compared to 53.5 percent in Europe during 2007. Thirteen years ago, Visit Nepal Year 1998 had aimed at bringing 500,000 tourists but only 398,008 tourists came to Nepal. The number of tourists in Nepal had decreased by 5 percent to 500,277 during the calendar year 2008 from 527,705 in 2007. The numbers again totalled 509,752 in the year 2009 (which was again less than 2007 figure) marking a growth of 1.9 percent.
Although only 412,446 tourists visited Nepal by air in the year 2010 (first 11 months of FY 2009/10), this number was one of the highest since 1999 when it reached to 421,243. However, lessons from for receiving less than the estimated numbers and their impact on Nepal’s economy should be taken from Visit Nepal Year 1998 and “South Asia Tourism Year” in 2005, when the declaration remained merely ceremonial and hence the impact was minimal.
Nepal Tourism Year 2011 has begun with a slogan “Together for Tourism”. This announcement anticipates at least one million international tourists in Nepal in the year 2011. One has to wait and see the direction and trend of Nepal’s tourism growth until the end of calendar year 2011.
Despite the fact that SAARC Chamber of Commerce and Industry (SCCI) also initiated tourism promotion events with the promotional tagline of “Magic that is South Asia”, the growth of tourism remained marginal in this region. Without any fanfare the volume of tourist arrival between 2000 to 2007in the Asia-Pacific region was more than double, from 85 million to 198 million. This is a matter of serious consideration for South Asia to integrate tourism sector in countries’ development plans. Lessons need to be learnt from those countries that have succeeded in generating huge resources from this sector. For example, in the US, visitors spent more than US residents travelling abroad, creating a positive balance of trade of USD 8.3 billion for the economy.
It is a matter of concern in terms of some estimates that future unemployment rate in Nepal would exceed 10 percent in 20 years. Even a higher GDP growth rate of 6.5 percent would take 30 years to address the unemployment problem ( By 2007, Nepal’s tourism sector had directly and indirectly employed roughly 700,000 people. Similarly, data available for 2007 shows the direct and indirect contribution of tourism in GDP was 6.4 percent. The industry has also helped growth in other sectors as diverse as horticulture, handicrafts, agriculture, construction and even poultry.
Gross foreign exchange earnings in convertible currency during 2002-2006 do not show much progress. The earnings from tourism was USD 106,822,000 in 2002, which increased to USD 162,790,000 in 2006. Split by sectors, out of USD 162,790,000, the highest earnings were USD 55,366 thousands from tourists and lowest was USD9650 thousands from hotels. Since the year 2006 represented the historic event of Comprehensive Peace Accord between the government and Maoists, the sector-specific contribution must have changed by now.
Except the elaboration of conventional tourism competitiveness index, not much work is found in Nepal that investigates the impact on poor especially at the household level. Therefore, it is difficult to presume right away that tourism development will eventually benefit the poor through the “trickle down” effect. Instead, the government should respond to media’s criticism on environmental degradation and peoples’ health. Otherwise, in the worst case scenario, domestic health and sanitation vulnerability may be accompanied by global pandemic any time soon by making beautiful but deeply troubled Nepal a “paradise-turned-hell”.
Tourism is one of the fastest growing industries with a projected real growth rate of 4.3 percent per annum for the next 10 years. It is estimated that by the year 2020, there would be 1.6 billion tourists worldwide with the receipts worth US$2 trillion. It is projected that tourism will create a job every 2.5 seconds. This sector promotes inclusive growth as travel and tourism accounts for 11 percent of the world’s GDP, 9 percent of global employment, 12 percent of global exports and 12 percent of global investment.
Tourism promotion is like “dream selling” and selling one’s dream depends on the brand identity. Therefore, to keep tourism development initiative going and avoiding the possibility of exhibiting Nepal as a “discomfort zone”, Nepal should strengthen ongoing brand of unique community based tourism initiative that has produced a model to exhibit its unique nature and heritage conservation, community benefit and sustainable funding mechanisms like the “Annapurna Tourism Development Project” and the Bhaktapur Conservation Project of the 1980’s.
Tourism Marketing Strategy for Nepal 2005-2020 reveals that 25 percent of visitors come on a package, whereas 75 percent come to Nepal independently. No reliable data is available on the rate of growth of domestic tourism and their annual expenses. Nepal does not have an up-to-date data on foreign visitors’ expenditure either. It necessitates undertaking visitor expenditure surveys regularly within the given timeframe to correctly estimate the demand and supply situation by integrating tourism into the wider economic development packages.

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