Money Finance Ministry nod to Caan plan to lease plot

The Finance Ministry on Tuesday cleared the way for the Civil Aviation Authority of Nepal (Caan) plan to lease its plot of land in Sinamangal to build a five-star airport hotel under the build-own-operate-transfer (Boot) model. According to the Caan’s plan, the 92-ropani land plot could be leased for at least 30 years, after which the land and the hotel would be returned to the Caan. Tourism Ministry officials said that the move was aimed at making commercial use of the land, located in a prime location, which has been underutilised. They said that the plan also seeks to facilitate tourism, offering accommodation to travellers passing through Tribhuvan International Airport (TIA). Building a luxury airport hotel near the country’s international airport would also help promote tourism as well as serve as the transit for passengers, they said. The officials said that after the Finance Ministry’s go-ahead, the proposal would be tabled at the Cabinet for the final nod. After the Cabinet’s approval, the Caan will hire a consultant to assess the feasibility of the project that includes annual lease rental payments and lease term, according to officials at the Tourism Ministry. Caan plans to issue a letter of intent for prospective developers after the assessment is completed. Tourism Ministry officials said a number of Nepali investors, including Yeti Group, have been in the race to get the plot on lease. “As the proposed hotel would be financially viable due to its ideal location and proximity to the airport, there could be a number of investors,” said an official, who did not want to be named. An Armed Police Force unit currently occupies the plot. The Tourism and Home ministries and Caan have agreed to relocate the APF unit to other location after the Cabinet approves the project. On November 7, 2013, the Finance Ministry had approved the Caan’s proposal after the Tourism Ministry gave its go-ahead in January, 2013. The proposal was then sent to the erstwhile Cabinet seeking its approval that eventually had returned the proposal and asked the Caan to submit details about the land. However, the airport plan was revived by the new government. There are currently nine five-star hotels in Nepal--seven in Kathmandu and two in Pokhara. Five-star hotels recorded an average occupancy of 61 percent last year, up from 58.85 percent in the previous year. According to the Tourism Ministry, out of 523,453 room nights produced by the five-star hotels, 319,284 were sold. Despite the growth in room occupancy last year, the hotels are likely to see a sharp fall in occupancy this year due to the earthquake and subsequent trade embargo imposed by India that resulted in sharp decline in tourists arrivals.

Source: The Kathmandu Post