Project Proposal
For the Establishment of a
Hotel with Restaurant Industry
Location:
Kathmandu Metropolitan City-07, Kathmandu District, Nepal
Promoters:
Name Country Passport No.
Ms. Lingqi Meng China E57507699
Mr. Anton Tantcev Russian Federation 551374934
Ms. Krysten Marie Wharton Canada AW162877
Ms. Qingyan Ye China EK2222426
Submitted to:
Foreign Investment and Technology Transfer Section
Department of Industry
Tripureshwor, Kathmandu
September, 2024
TABLE OF CONTENTS
PROJECT HIGHLIGHTS 3
PROJECT BACKGROUND 4
1.1 Introduction 4
1.2 Product/Service Description 5
1.3 Government Policy 5
1.4 Promoters 5
MARKET ASPECT 6
2.1 Introduction 6
2.2 Target Group 7
2.3 Market Assessment 7
2.4 Capacity Determination 9
2.5 Marketing Strategy 9
TECHNICAL ASPECT 10
3.1 Introduction 10
3.2 Physical Facilities 10
3.3 Location 10
3.4 Project inputs 10
3.5 Environmental issues 10
3.6 Human Resource 10
FINANCIAL ASPECT 11
4.1 Financial Aspect 11
4.2 Conclusion 11
2
PROJECT HIGHLIGHTS
Name of the Company Will be determined later after approval from OCR
Name of the Project Hotel with Restaurant Industry
Location of the Project Kathmandu Metropolitan City-07, Kathmandu District
Location of Registered Office Kathmandu Metropolitan City-07, Kathmandu District
365 Days/Year
Working Schedule 3 Shift/Day
8 Hours/Shift
Product/Services Hotel with Restaurant
Type/Scale of Industry Tourism/Small
Capacity
Hotel 24 Beds
Restaurant 70 Seats
Manpower 63 Persons
Direct Staff 46 Persons
Indirect Staff 17 Persons
Electricity/Power Requirement 80 kVA
Investment 80,000,000 Rs.
Fixed Asset Investment 69,000,000 Rs.
Working Capital Investment 11,000,000 Rs.
Loan from financial institutions - Rs.
On fixed asset/Long Term Loan - Rs.
On working capital/Short Term Loan - Rs.
Equity Investment 80,000,000 Rs.
On Fixed Asset 69,000,000 Rs.
On Working Capital 11,000,000 Rs.
Annual Operation Cost 94,943,203 Rs.
Fixed Operation cost 21,302,492 Rs.
Variable Operation Cost 73,640,711 Rs.
Revenue/Profit
Gross Sales Revenue 126,235,250 Rs.
Net Sales Revenue 119,923,488 Rs.
Annual Net Profit-Rs. (After Tax) 18,735,213 Rs.
Financial Appraisal-Indicators
Breakeven Point (BEP) 46.03%
Return of Equity (RoE) 23.42%
Return on Investment (RoI) 23.42%
3
PROJECT BACKGROUND
1.1 Introduction
Nepal is situated in the lap of Mount Everest and bordered by China to the North and India to
the south, east and west is located between latitudes 26022'N —30027'N and longitudes
80004'E — 88012'E. The country with total land area of 147.181 Sq. Km. has diverse
physical characteristics in topography, climate, geology and land use system. The country is
predominantly mountainous and the elevation ranges from 64 meter to 8848 meter above sea
level with three distinct geographic features. They are plains (terai), hills and mountains.
Tourism comprises the activities of persons traveling to and staying in places outside their
usual environment for not more than one consecutive year for leisure, business and other
purposes. Tourism has become an important economic activity in all the countries of the world.
It creates various direct, indirect and induced effects in the economy. Tourism brings in large
amounts of income contributing around 3 percent to gross domestic product (GDP) of Nepal
(15th Period Plan of Nepal, NPC). With the tourism business, enterprises and the people
(related directly or indirectly) generate earnings from the operation of the tourism business
activities. Further, tourism as an economic activity produces various direct, indirect and
induced impacts in the economy. It ultimately increases the foreign exchange earnings,
generates employment opportunity and increases income. The resultant income circulates in
the economy, encourages for other economic activities to take place, inducing many rounds of
income. It also stimulates the income and employment in other sectors of the economy.
Tourism has various economic, social, cultural and environmental effects on tourism
destinations.
The Nepalese hospitality industry along with tourism continues to be one of the key segments
driving the growth of the services sector in the Nepalese economy. Currently, Nepalese
economy ranks 101th in the world in terms of GDP as of FY19 as per IMF (2019 estimates).
Travel and tourism sector contribute about US$ 8.9 trillion (y-o-y growth of 3.5%) as per
World Travel & Tourism Council’s (WTTC), providing employment to about 330 million
persons in 2019 globally. Also, travel & tourism industry earns an average of 25% of the total
foreign exchange for the country.
The hotel business in Nepal has great potential for growth and profitability. Nepal, and
particularly Kathmandu City, is a popular tourist destination and attracts a significant number
of tourists from around the world. Kathmandu is known for its natural beauty which attractions
draw a large number of tourists to the city each year.
4
There has been a significant increase in the number of tourists visiting Nepal over the past
decade, with a record high of 1.19 million tourists in 2019, according to the Nepal Tourism
Board. The government of Nepal has also been taking steps to promote tourism in the country,
including by improving infrastructure and offering incentives for investors.
All of these factors suggest that there is a growing demand for accommodation in Kathmandu,
and the hotel business has a lot of potential for growth and profitability.
1.2 Product/Service Description
The Hotel with Restaurant will serve excellent room services, wonderful living environment,
multinational cuisine, bakery products, tea/coffee, liquor and soft beverage services to the
target customers. Bar and Restaurant will be available in the hotel to our valued customers.
Cleanliness, maintenance, hospitality and delivery of services would all adhere to an extremely
highstandard. There will also be a choice of environments in public areas of sufficient size to
provide generous.
1.3 Government Policy
The proposed industry falls under "Tourism Industry" and hence it is entitled, among others,
to enjoy the following incentives and concessions.
❖ Corporate tax shall not exceed 25% of profit.
❖ Pre-operating expenses incurred in connection with skill development and training will
be allowed to be capitalized.
1.4 Promoters
The promoters have long experiences in various types of business activities. The promoters have
well-conceived the project paying due consideration to local conditions, need of the target group
and likelycompetition from the similar industries in Nepal. Hence there should not be any
constraints in successful implementation and operation of the project.
The name and the national of the promoters along with their shareholding in the proposed company
shall be as below:
S.N. Name Nationality Passport No. Share
in %
1 Ms. Lingqi Meng China E57507699 25 %
2 Mr. Anton Tantcev Russian Federation 551374934 25 %
3 Ms. Krysten Marie Wharton Canada AW162877 25 %
4 Ms. Qingyan Ye China EK2222426 25 %
5
MARKET ASPECT
2.1 Introduction
Marketing is a process of identifying, anticipating and satisfying customer requirements for
consumer goods or services. Early marketing techniques involved little more than making
potential consumers aware of a product's existence and benefits and getting it to the market.
Now, however, the marketing process starts even before decisions are taken about what
products should be made.
Tourism is Nepal's fourth largest industry by employment, according to a study. The analytical
study on tourism released by the Central Bureau of Statistics of Nepal shows that Nepal’s
tourism industry provides 371,140 jobs. This represents 11.5 percent of persons engaged in all
industries in the country. The tourism industry is growing very rapidly and Nepal has
tremendous potential in tourism development because of her unique natural and cultural
heritage.
Period Plans, Annual Programs, Sectoral tourism policies of Nepal emphasis on sustainable
development, foreign currency earnings, creating employment opportunities, improving
regional imbalances and projecting the image of Nepal more assertively in the international
arena, through the development and diversification of the travel and tourism industries.
Having 8 of the 10 highest mountains in the world, Nepal is a hotspot destination for
mountaineers,rock climbers and people seeking adventures. The Hindu and Buddhist heritage
of Nepal and its mild weather are also strong attractions.
The Government of Nepal has been stimulating investment in tourism infrastructure. The rate
of growth in tourist arrivals, especially in the business travel category, coupled with the high
occupancy rates for 5-star hotels in Nepal, signal opportunities for investment in this sector.
Many international brands have their presence in Nepal such as Marriott, Hilton, Hyatt,
Shangrila, Radisson etc. Government’s plans to upgrade the current international airport are
already underway, which would increase the tourist traffic significantly.
The Nepalese responded well to franchise restaurants like KFC, Pizza Hut, and Dominos; more
opportunities for investment exist in developing themed restaurants serving specialty food The
potential increase in the inflow of tourists will require more specialty restaurants to cater to
their needs.
The growth of hotel management institutes across the country means that there will be a steady
supply of skilled manpower for this sector.
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2.2 Target Group
The target group of the proposed business is domestic as well as foreign tourist.
2.3 Market Assessment
The number of tourist arrival and their average stay, number of tourists by countries and other
relevant data are shown in following tables. These data are taken from Economic Survey, 2021-
22 published by Ministry of Finance, Nepal.
The tourist arrival in 2020 was decreased by 81 percent to only 230,085 compared to the
previous year. In addition, in 2021 this number has decreased by 34.3 percent to 150,962. This
number is the lowest since 1977.
The tourist arrival and length of stay is presented in following Chart:
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There are 22 international airlines flying to Nepal up to 2078 Falgun B.S. Similarly, number
of domestic airlines is 20. There are altogether 53 airports constructed within country, among
which 32 are in regular operation. Gautam Buddha and Pokhara International Airport is almost
ready for operation. Number of people arriving Tribhuvan International Airport, Kathmandu
is 17.79 Lakhs in 2021.
Indians tops the list when it comes to the number of people vising Nepal, followed by USA,
UK and China.
Vacation and Entertainment remains the top most reason of tourist visiting Nepal, followed by
Trekking and Mountaineering and Pilgrimage which has been shown in the following chart.
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2.4 Capacity Determination
The number of tourists coming in Nepal and cost of service is the primary determinants of
sales revenue in hotel, bar and restaurant industry. Length of stay, discount pricing, sessional
pricing, guest segment pricing, competitor-based pricing, occupancy based dynamic pricing
are common pricing strategies which will be used in our business.
The cost of service such as room, breakfast, lunch, dinner as well as beverages and liquors
sales depend upon the quality.
Annual Sales Revenue and Profit
SN Product/Services Quantity Unit Rate Amount-Rs Total-Rs
A Hotel
Bed Sales 8,760 No of Guests 5,500 48,180,000 48,180,000
B Restaurant
1 Food Sales 66,430,000
a Breakfast 25,550 No of Guests 600 15,330,000
b Lunch 25,550 No of Guests 1,000 25,550,000
c Dinner 25,550 No of Guests 1,000 25,550,000
2 Soft Beverage and Bar Sales 11,625,250
Soft Beverage (50 % of
a 38,325 No of Guests 90 3,449,250
total Guests)
Liquors (40% of Dinner
b 10,220 No of Guests 800 8,176,000
Guests)
Total Gross Sales Revenue 126,235,250
2.5 Marketing Strategy
Adequate advertisement and promotional campaigns will be launched to attract the domestic
and international tourists. Advertisement materials will be published in the nationally
acclaimed newspapers and magazines and tourism specific promotional magazines. Use of
social media will be utilized to promote the business.
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TECHNICAL ASPECT
3.1 Introduction
Hotel with Restaurant industry depends primarily on the level of services offered to the
customers backed by state of-the-art technologies. The feeling of home away from home,
luxury service, cleanliness, hospitality, wide variety of choices in food etc. will be taken care
properly. Advanced technologies, quality utensils and hygiene will be maintained for the
customer in the proposed project.
3.2 Physical Facilities
• The building will be constructed on lease Land.
• Guest rooms, lobby, reception, Meeting Halls, Restaurant and Bars will be
designed carefully and suitably furnished with furniture and fixtures to give
attractive and calm ambience.
• Modern and hygienic kitchen with adequate ventilation and exhaust system will be built.
• The power requirement is estimated to be 80 kVA which can easily be tapped
from the public transmission line. DG sets will be installed to cope with abrupt
power failures.
• The detailed list of plant, machinery and equipment is given in Annex-I of the
financial aspect of this project proposal.
3.3 Location
Location plays a vital role in the success of hotel with restaurant industry. Easy access, parking
facilities, surroundings, level of pollution, facilities, peacefulness etc. play a great role in hotel
with restaurant industry. We will start our business in Kathmandu Metropolitan City-07,
Kathmandu District, Nepal. This has strategic benefits compared with other competitors.
3.4 Project inputs
Project needs food stuff, beverage, liquor etc. as raw materials, machines, equipment to run the
hotel. Detailed list has been described in the last part of this report.
3.5 Environmental issues
The proposed industry will operate in Kathmandu Metropolitan City-07, Kathmandu District,
Nepal. Which will not have any adverse effects on environment. We will take care of pollution,
noise and other environment related issues. We will carry out environment audit if needed.
3.6 Human Resource
Promoters will run the management of the project while the experienced staff will be hired
locally. Direct staff will be hired and indirect staff will be contracted on need basis. The details
of the manpower are shown in the financial aspect of this report.
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FINANCIAL ASPECT
4.1 Investment Structure
The good return, as per the projection, encourages the investor to invest proposed industry.
The detailed information on the key aspects of financial structure such as investment on fixed
asset andworking capital, annual operating cost, sales revenue, financial indicators and so on
are given in Annexure of this report. The synopsis of the annexure is presented in subsequent
paragraphs.
S.N. Cost Head Total-Rs.
1 Land & Land Development 2,000,000
2 Building & Other Civil Works 24,500,000
3 Plant, Machinery & Equipment 22,500,000
4 Furniture, Fixture & Office Equipment 8,000,000
5 Vehicle 9,800,000
6 Pre-Operating Expenses 2,200,000
- Total Fixed Asset Investment 69,000,000
- Working Capital 11,000,000
- Total Investment 80,000,000
S.N. Source of Finance Loan Equity Total
% Rs. % Rs. Rs.
1 Fixed Asset Investment 0% 0 100% 69,000,000 69,000,000
2 Working Capital 0% 0 100% 11,000,000 11,000,000
Total Investment 0% 0 100% 80,000,000 80,000,000
S.N. Parameters
1 Return on Investment 23.42%
2 Return on Equity 23.42%
3 Break Even Point 46.03%
4.2 CONCLUSION
In view of the foregoing analysis, it is found that the proposed industry is technically feasible
and economically viable.