CARE Ratings Nepal assigns BB and A4 to long term and short term bank facilities of Thamel Plaza Hotel and Suits

CARE Ratings Nepal Limited (CRNL) has assigned rating of CARE-NP BB to the long term bank facilities and CARE-NP A4 to the short term bank facilities of Thamel Plaza Hotel & Suits Private Limited (TPHS). 

Key Rating Weaknesses

• Time overrun of the hotel followed by project cost overrun
• Operational stabilization risk and long gestation period associated with the project
• Financial risk profile marked by low profitability and weak debt coverage indicators for the initial year of operations
• Exposure to volatile interest rates
• Susceptibility to cyclicality, intense competition and geographic concentration risk in the hospitality sector

Key Rating Strengths

• Experienced directors and management in related field
• Association with reputed hotel brand likely to benefit the company in terms of marketing and hotel operations
• Strategic locational advantage of the hotel
• Low project implementation risk
• Government initiative and support for tourism .
• Increasing trend of tourists in Nepal

About the Company

Thamel Plaza Hotel & Suits Private Limited was incorporated in January 05, 2012. The company is setting up a premium hotel property in Thamel, Kathmandu which will operate under the brand name of „Ramada Encore Kathmandu Thamel‟. The hotel is currently under construction with a total of 90 room keys. Commercial operation date of the hotel is expected at the beginning of February 2020. TPHS is being promoted by total number of 37 shareholders including two institutional promoters and have infused total paid-up equity of Rs. 271 Mn as on July 16, 2019.

Details of the Facilities rated

Source: careratingsnepal.com