Travel and tourism are key drivers of economic growth worldwide, accounting for almost one-tenth of global GDP and employing over 100 million workers. For developing countries, this industry is particularly supportive of macroeconomic stability and growth, as spending on travel and accommodation creates demand for services from many small- and medium-sized companies.
For Nepal, home to Mt. Everest, dramatically beautiful landscapes and fascinating culture, tourism is one of its most important industries, earning about 5 percent of its foreign currency inflows. But this sector is struggling to emerge from a devastating earthquake in April 2015 which killed almost 9,000 people.
“Nepal right now needs support in its recovery and rebuilding efforts. It also needs to build the confidence of, and bring back, tourists and foreign investors,” said Vivek Pathak, IFC’s Director for Asia-Pacific.
The earthquake destroyed much of the country’s infrastructure. IFC and FMO, the Netherlands-based development bank, are together investing $6 million to develop a green-field, three-star hotel in Kathmandu aimed at business travelers and tourists.
“IFC’s investments promote development of critical infrastructure in places where there is often a shortage of business class hotels for potential investors and send a positive signal to other investors,” Pathek said.
The hotel, which will feature the most up-to-date standards for energy and water efficiency, will be owned by Nepal Hospitality and Hotel and operated by international chain Marriott under its Fairfield brand.
“This deal, amidst the recent earthquake, reaffirms that the Nepali private sector, IFC, and FMO are committed towards economic prosperity in Nepal,” said Gaurav Agarwal, Managing Director of Nepal Hospitality and Hotel. “The 110-room Fairfield Kathmandu, the first internationally-branded, professionally-managed mid-market hotel in Nepal, will stimulate tourism and support the economy, and the green building design will serve as a model for replication across the industry.”
IFC invests in hotels and tourism because of its strong development impact, particularly for low-income countries and fragile and conflict-affected countries. Since 1956, IFC has invested over $2.8 billion in over 260 projects in 89 countries with more than half of these investments in frontier countries.