Kathmandu. Bara-based five-star hotel Ichcha, which is preparing to raise additional paid-up capital by issuing shares (IPO) to the general public, has received a ‘Dabble B’ rating.
Rating agency ICRA Nepal has given such a rating for the proposed IPO purpose. According to the agency, in Nepal, such a rated organized organization has a moderate risk regarding fulfilling its financial obligations within the stipulated time.
According to ICRA Nepal, the last fiscal year 2080. The hotel had a total turnover of Rs 171 million in 2018. fiscal year 2081. In the first nine months (mid-March) of 1982, its turnover was Rs 100.8 million.
Hotel Ichcha is the first and only five-star hotel in Madhes province. The hotel, which has been struggling to make a profit since it came into operation, has not been able to do the expected business so far.
Its main source of income is rent from casino operators and income from the sale of rooms. If the government’s policy changes, if the casino is closed and the rental income is lost, the hotel can again be in financial crisis at any time. Due to the dispute with the locals of Simara, the closure of the casino had a negative impact on the overall income of the hotel.
Although the hotel’s infrastructure is spread over a large area, there is a lack of well-equipped and wide banquet hall. For this reason, it has not been given priority for institutional meetings and ceremonies.
The hotel has recently purchased land owned by its operator for Rs 203 million to add infrastructure. According to ICRA Nepal, the hotel, which initially came into operation with an investment of Rs 200 million, has already invested Rs 1.2 billion in share capital since mid-May. The shareholders have invested an additional Rs 314 million as against the paid-up capital of Rs 886 million as of Mid-March last year. ICRA Nepal has stated that the additional capital will be spent for land acquisition and room decoration.
weak management
Its customers have had a bitter experience that the hotel’s cleanliness, maintenance and internal management are in shambles due to the lack of cash flow due to limited income.
Although this hotel can be a destination for marriage programs and other social rituals related programs, especially among Indians in Bihar, India, it has not been selected due to poor management. Although it has fewer rooms and limited infrastructure than this hotel, the Hotel Classic Plaza near Simara Airport is a priority for most customers. The rate of both the classic plaza hotel room and the restaurant is more expensive than that of the Desire hotel.
Problems in infrastructure
The banquet hall of the hotel with a total of 60 rooms is on the third floor. There is a narrow hall with a capacity to accommodate barely 100 people. The pre-event area outside the hall is also limited. Although a elevator has been installed to reach the hall, there is no arrangement for a ladder attached to the elevator. Since there is a door in the guest room in the exit of the elevator, the guests living in the hall feel a little uncomfortable due to the crowded noise.
If more than 100 guests stay in the hotel for the residential program and participate in the program in the banquet hall, then the verandah of the hotel is full while moving in the hall. The verandah is not wide enough.
Hotel stood like this
Hotel operator Ichchha Bahadur Wagle, who is also a real estate entrepreneur, started the work of plotting and selling land in Simara. He set up a four-star hotel on some part of the plot of land. Although he opened the first four-star hotel in Simara, the construction of the airport has not even started.
No five-star level feature
Although it is now dependent on Indian tourists and casinos, the management of the hotel is not good due to lack of adequate income and cash flow. Five-star hotel-level hotels do not provide the expected service facilities.
Hotel operators need to ensure adequate cash flow and focus on the reconstruction of experienced skilled manpower, quality service facilities provided by the hospitality industry, and reconstruction of old hotel infrastructure.
If indian tourists entering Nepal for the first time from India stay in this hotel as a five-star hotel, then there is a risk of a wrong impression regarding other five-star hotels in Nepal.
