Nepal, renowned for its majestic Himalayas and rich cultural heritage, is an emerging hub for tourism and the hospitality industry, particularly in the hotel and resort sector. Establishing a star-rated hotel or resort in Nepal presents a lucrative business opportunity. However, registering a star hotel or resort involves meeting specific criteria and complying with a structured regulatory process.
Understanding Star Ratings in Nepal
Hotels and resorts in Nepal are classified from 1-star to 5-star categories based on their level of facilities, service quality, infrastructure, location, and overall standards. This classification system ensures consistency in hospitality standards across the country and helps tourists make informed choices. The Department of Tourism, operating under the Ministry of Culture, Tourism and Civil Aviation, oversees the classification process as per the Hotel Standard Operating Procedure, 2082.
Legal Structure and Initial Setup
Before applying for star classification, the following preliminary steps are mandatory:
- Register the business entity at the Office of the Company Registrar. You may choose to register as either a Private Limited or a Public Limited company, depending on your business structure.
- PAN/VAT Registration
Obtain a Permanent Account Number (PAN) and register for Value Added Tax (VAT) at the Inland Revenue Department to meet tax compliance requirements. - Municipality Registration
Complete registration with the local level authority by obtaining approval from the ward office of the relevant municipality or rural municipality. - Industry Registration
Based on the company’s capital investment, register the business either with the Department of Industry or the Department of Cottage and Small Industries, as applicable. - Share Register Book Submission
Prior to applying for star classification at the Department of Tourism, a certified copy of the Share Register Book must be submitted to the department
Feasibility Study and Project Report for Star Hotel
A comprehensive feasibility study and project report is a critical prerequisite before establishing a star-rated hotel in Nepal. This document not only provides strategic direction for the project but is also a mandatory requirement when applying for approvals from regulatory bodies such as the Department of Tourism, Department of Industry, or while seeking financial assistance from banks and investors.
Feasibility Study
The feasibility study is designed to assess the viability, sustainability, and profitability of the proposed hotel project. It typically includes:
- Market Analysis: Evaluation of tourism trends, customer demand, local and international tourist influx, and competition in the target area.
- Location Assessment: Review of the site’s accessibility, proximity to tourist attractions, transport links, and infrastructure suitability.
- Target Segment Identification: Definition of the customer base—domestic tourists, international travelers, business guests, etc.
- Financial Projections: Forecasts of capital investment, operational costs, breakeven point, and expected ROI (Return on Investment).
- SWOT Analysis: Identification of internal strengths and weaknesses, along with external opportunities and threats.
2. Project Report
The project report is a formal document that translates the findings of the feasibility study into an actionable business plan. It includes:
- Executive Summary: Overview of the project vision, mission, and business goals.
- Company Profile: Information about the promoters, business structure, and management team.
- Project Design and Layout: Description of hotel classification (e.g., 3-star, 5-star), number of rooms, suites, restaurants, conference halls, and facilities.
- Cost Estimates: Detailed breakdown of land, construction, furnishing, equipment, licensing, and working capital.
- Implementation Schedule: Timeline for land acquisition, construction, recruitment, branding, and operational launch.
- Regulatory Compliance Plan: Overview of permits, licenses, environmental clearances, and statutory registrations.
- Risk Assessment and Mitigation Plan: Potential business, legal, and environmental risks along with mitigation strategies.
Infrastructure Certification and Environmental Compliance :
For hotels with a capacity exceeding 55 beds, it is mandatory to obtain a Building Completion Certificate issued by a certified engineer or architect. This certificate verifies that the hotel infrastructure has been constructed in accordance with the approved design, safety standards, and structural integrity requirements as per Nepal’s building codes.
Additionally, depending on the scale, location, and environmental sensitivity of the project, an Environmental Impact Assessment (EIA) may be required. The EIA approval must be obtained from the Ministry of Forests and Environment or the concerned environmental authority, as per the prevailing environmental protection laws of Nepal. This ensures that the hotel operations do not pose adverse impacts on the local ecosystem, biodiversity, or community health.
Excise Duty Compliance
If the hotel operates a bar or serves alcoholic beverages in its restaurant or other service areas, it is mandatory to obtain an Excise Duty license from the relevant tax authority. This license authorizes the sale and service of alcohol and ensures compliance with Nepal’s Excise Duty Act and Regulations.
The Excise Duty license is typically issued by the Inland Revenue Department (IRD) or the concerned Excise Duty Office, and must be renewed annually. Failure to obtain this license prior to operating an alcohol-serving facility can result in legal penalties, fines, or suspension of business operations.
Department of Food Technology and Quality Control (DFTQC)
The Department of Food Technology and Quality Control (DFTQC) is the regulatory authority responsible for inspecting and certifying the quality, safety, and hygiene of food served in hotels and restaurants. For hotels operating food and beverage services, it is mandatory to obtain approval from the DFTQC, which involves inspection of the kitchen, food storage, preparation areas, and compliance with food safety standards.
This certification ensures that the hotel adheres to public health regulations and maintains proper sanitation and hygiene practices in its food operations.
Hotel Classification & Standard 2082
| Star Rating | Room Features | Services | No. of Rooms Required Inside Kathmandu Valley | No. of Rooms Required Outside Kathmandu Valley |
| 1 Star | 1-star hotels offer the most basic level of accommodation, primarily catering to budget travelers. Rooms typically feature minimal furnishings and may have either shared or private bathrooms. | Services are limited, with basic daily housekeeping available upon request and essential toiletries such as soap provided. In-room amenities are minimal, and room service is generally unavailable. The minimum area for a single bedroom is 150 sq. ft., while a double bedroom must have at least 170 sq. ft. | 20 | 15 |
| 2 Star | A 2-star hotel offers modest comfort with slightly enhanced amenities. Guests can expect a private bathroom, basic furnishings, complimentary Wi-Fi, and limited front desk services. In-room features often include a television, telephone, and essential toiletries. | Properties may offer a continental breakfast and minimal food service options through vending machines or partnerships with nearby establishments. In a 2-star hotel, the minimum area for a single bedroom should be 150 sq. ft., and for a double bedroom, it should be 170 sq. ft. | 40 | 30 |
| 3 Star | A 3-star hotel provides a mid-range level of comfort and services, making it suitable for both business and family travelers. These hotels typically feature a 24-hour reception, an on-site restaurant, and a fitness center. | In 3-star hotels, 24-hour CCTV surveillance is provided for the safety of guests. To enhance security, hotels should use electronic machines to check luggage. The minimum area for a single room in a 3-star hotel is 170 sq. ft., and for a double room, it should be 200 sq. ft. | 60 | 45 |
| 4 Star | 4-star hotels are known for providing a high standard of comfort and service, appealing to both business and leisure travelers. These establishments typically offer well-appointed rooms with high-quality furnishings, comfortable bedding, flat-screen televisions, and coffee and tea-making facilities. | Room service and housekeeping are available 24 hours a day, along with front desk assistance, multilingual concierge services, and options for laundry or dry cleaning. In a 4-star hotel, the minimum area for a single room is 100 sq. ft., and for a double room, it should be 200 sq. ft. | 80 | 60 |
| 5 Star | These properties feature spacious rooms and suites with premium furnishings, smart room technology, and soundproofing. | 5-star hotels provide highly personalized, luxury-focused services tailored to the specific needs and preferences of each guest. These may include 24/7 butler and room service, personal concierge assistance, private airport transfers, and access to luxury vehicles. In a 5-star hotel, the minimum area for a single room is 225 sq. ft., and for a double room, it should be 250 sq. ft. | 100 | 80 |
Following documents and details are required.:
| S.N. | Description of Documents |
| 1 | Application with receipts of NRs 100. The application should clearly state the level of classification requested for the recommendation of industry registration and level classification. It should be on the hotel’s letterhead, signed by the hotel operator, manager, or authorized person, and sealed. |
| 2 | Scheme or feasibility study report. |
| 3 | Construction work map. In municipalities and urban-facing villages: proof of map approval from the local body in the name of the hotel. In other VDCs: a certified map from an engineer. If the map isn’t approved, a recommendation from the local body or business registration proof must be attached. A construction completion report must also be submitted. |
| 4 | Copy of citizenship certificate and personal details (biodata) of the owner/shareholders. |
| 5 | Copy of land ownership certificate. It should be in the name of the company/firm. If in the name of an individual, the firm/company must also be mentioned. |
| 6 | Company registration certificate, articles of association, and bylaws (for companies only). |
| 7 | If the capacity is above 50 beds: preliminary environmental study report required. If between 50–100 beds: preliminary environmental assessment report. Required for capacities over 100 beds. |
| 8 | If the house is rented: a copy of the agreement (minimum 20-year period), and the landowner’s certificate must be attached. |
| 9 | Most recent audited financial report, proof of share register update (for companies), and current year’s tax payment certificate. Not required if the company is newly registered. |
| 10 | Copy of industry registration certificate (applicable only if applying for classification after registering the industry). |
| 11 | Approval letter from the Department of Industry in case of foreign investment. |
| 12 | The hotel should have proper vehicle parking arrangements as per Hotel Classification & Standard 2076. |
Note: The company’s memorandum of association and business certificate should clearly state the purpose of operating a hotel /resort restaurant. When requesting a hotel /resort classification the classification level should be clearly stated. After the application is submitted, the department of tourism will conduct an on-site inspection and provide a certificate only if it is deemed appropriate according to the prescribed criteria
Conclusion:
The star hotel registration process in Nepal involves the completion of a thorough evaluation and classification by the relevant authorities, based on established standards and criteria. After submitting the required documents and meeting the necessary requirements, including room features, services, and facilities, the hotel undergoes an inspection. Upon successful review, the hotel is officially classified according to its star rating, which is then registered with the Department of Tourism or relevant government body.
This process ensures that hotels in Nepal meet specific quality standards and are recognized for their services, contributing to the growth and credibility of the hospitality industry in the country. Once registered, the hotel is eligible for business operations, and the classification helps inform consumers about the quality of the services provided.
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