Hilton Hotel To Open By 2023/2024; The Construction Cost Of The Five-Star Hotel Being Constructed By Shankar Group Has Doubled

The cost of the five-star Hilton hotel being built by Shankar Group in Naxal has risen after the completion date was delayed by more than four years.

The cost of the hotel, which was anticipated to be built in B.S 2073 with an expenditure of Rs. 3.5 Arba, is predicted to increase to Rs. 6.68 Arba. The hotel is being built by the Shankar Group's Jagdamba Hospitality Group.

The Shankar Group hotel's structure was altered as a result of the earthquake to make it safe and earthquake-resistant. The construction was delayed as a result. In addition to the obstruction, Shankar Group claimed that the design of the hotel is taking the most time, which is why the construction of the hotel is taking longer.

The Corona pandemic has also accelerated hotel construction. From the latter part of 2018, the group began construction on the hotel. It was intended to be constructed in three years. However, the covid-19 has further delayed the hotel's development phase.

The hotel, which was originally planned to have 135 rooms, has gained 39 additional rooms, according to the company, expanding its capacity. There will be 174 rooms in the hotel. A swimming pool will be at the top of the 17-story hotel's three-story basement. The building will be 140,000 square feet in size.

10 ropani of land is being used to build a hotel next to the Naxal Bhagwati temple. The goal has been established for the hotel to open by 2023 or 2024, according to the rating company Infomerics Ratings Nepal.

The cost price per room was formerly Rs. 2.80 crores, but it is now Rs. 3.80 Crores. According to Infomerics Ratings, the project's financial progress as of April 2022 is 61 percent.

According to a contract for the management of the hotel between the Shankar Group and the hotel company Hilton Worldwide Manage Limited, the hotel will be run under the name Hilton Kathmandu City Center. Sahil Aggarwal, the managing director of the Shankar Group, owns all of the company's shares.

Infomerics has given IRN B Plus rating for a long-term loan of NPR 5012 Mn. The company has got an IRNA A Four rating for a short-term loan of Rs 10 Mn.

Key Ratings by Infomerics Credit Rating Nepal Limited:

Key strength

• Strategic Location of the project
• Established promoter group with strong promoter profile; albeit not in hotel sector
• Brand recognition of Hilton and expertise of hotel manager
• Government initiative and support to tourism industry

Key Weaknesses

• High implementation risk associated with the project
• High debt funded capex; could result in stretched liquidity
• Intense competition with limited segment and geographic diversification
• Risk of interest rate volatility