ICRA Nepal has placed the ratings assigned to bank loan limits of Hotel Mystic Mountain Private Limited (MMH) on watch with negative implications. These ratings include the rating of [ICRANP] LBB @ assigned to the company’s long-term loans worth NPR 505 Million and the rating of [ICRANP] A4+@ assigned to the company’s short-term loans (including non-fund-based limits) worth NPR 35 Million.
The ratings for MMH have been placed on watch with negative implications, given the expected impact of COVID-19 in the Nepalese hotel and hospitality sector. The Covid-19 outbreak in early 2020 followed by travel restrictions and lockdowns in the following weeks in Nepal as well as countries worldwide is likely to further strain the financial profile, cashflows and debt servicing capacity of the players in the Nepalese hotel sector.
MMH’s dependence on leisure tourists is also likely to delay the return to normalcy as leisure tourism is expected to recuperate slower than business tourism. The cancellation of “Visit Nepal Year 2020”, an ambitious campaign by the government of Nepal (GoN) aimed at bringing 2 million foreign tourists in 2020, is expected to create a dampening affect across the tourism sector including hotel industry.
Hotel Mystic Mountain Private Limited (MMH) was incorporated in May 2013. Its registered office is located at Mandan Deupur, Kavrepalanchowk. MMH owns and operates a four-star resort-type 72-room hotel. It commenced operations with 33 rooms on July 28, 2017. The hotel property is located ~30 kilometres east from Kathmandu, in Nagarkot, a small town in the hills surrounding the Kathmandu valley. The property is developed over ~3.5 acres and consists of two blocks housing 72 rooms (including 71 rentable rooms). The hotel is under the sole ownership of Mr. Bal Krishna Dhoju, a second-generation hotelier.
MMH is an independent hotel without any affiliation to foreign or domestic hotel chains. The hotel has been certified as a four-star property by the Department of Tourism, Nepal in March 20, 2018 which is valid for a five-year period.
Source: ICRA Ratings Nepal