2-Star Hotel Registration in Nepal

The hospitality industry in Nepal has seen significant growth in recent years, with tourism being a major contributor to the national economy. Establishing a 2-star hotel requires compliance with specific legal requirements and standards set by the government. This article outlines the comprehensive process of registering a 2-star hotel in Nepal, focusing on the necessary approvals from the Provincial Ministry Tourism Office and other regulatory bodies.

Legal Framework for Hotel Registration in Nepal

The registration of hotels in Nepal is primarily governed by the Tourism Act 2035 (1978) and its subsequent amendments, along with the Hotel, Lodge, Restaurant, Bar and Tourist Guide Rules 2038 (1981). These legal frameworks establish the classification criteria, operational standards, and registration procedures for different categories of hotels, including 2-star establishments. Additionally, the Industrial Enterprises Act 2076 (2020) provides guidelines for registering tourism-related businesses as industrial enterprises.

The Department of Tourism, under the Ministry of Culture, Tourism and Civil Aviation, previously handled hotel registrations at the federal level. However, following Nepal’s transition to a federal structure under the Constitution of Nepal 2015, the authority for registering and monitoring hotels has been largely devolved to the Provincial Ministry Tourism Offices, with certain oversight maintained by federal authorities.

Requirements for 2-Star Hotel Classification

Physical Infrastructure Requirements

A 2-star hotel in Nepal must meet specific physical infrastructure standards as prescribed by the Hotel, Lodge, Restaurant, Bar and Tourist Guide Rules. These include:

• Minimum of 15 well-furnished rooms with attached bathrooms
• 24-hour hot and cold water supply in all bathrooms
• Adequate ventilation and natural light in all rooms
• Proper waste management system
• Fire safety equipment and emergency exits
• Reception area with adequate seating arrangements
• Dining facilities with proper kitchen setup
• Backup power supply system
• Adequate parking space

Service Standards Requirements

Beyond physical infrastructure, 2-star hotels must maintain certain service standards:

• Trained staff with basic hospitality skills
• 24-hour reception service
• Room service during designated hours
• Daily housekeeping services
• Laundry services
• Basic security arrangements
• Internet connectivity
• Telephone services

Environmental and Safety Compliance

Environmental and safety standards are crucial for hotel registration:

• Environmental Impact Assessment (EIA) or Initial Environmental Examination (IEE) approval as per the Environment Protection Act 2076 (2019)
• Building compliance certificate from the local municipality
• Fire safety clearance from relevant authorities
• Compliance with waste management regulations
• Accessibility features for differently-abled guests

Step-by-Step Registration Process

1. Company Registration

The first step in establishing a 2-star hotel is registering a company:

1. Prepare company documents including Memorandum of Association and Articles of Association
2. Submit application to the Company Registrar’s Office
3. Pay the prescribed registration fee (varies based on authorized capital)
4. Obtain the Company Registration Certificate
5. Register for Permanent Account Number (PAN) with the Inland Revenue Department

This process typically takes 7-10 working days and establishes the legal entity that will own and operate the hotel.

2. Business Registration with Local Municipality

After company registration, the business must be registered with the local municipality:

1. Submit application to the local municipality office with company documents
2. Provide property ownership documents or lease agreement for the hotel premises
3. Submit building blueprints and construction permits
4. Pay the municipal business registration fee
5. Obtain the Business Operation Permit (Byabasaya Darta Praman Patra)

This process ensures compliance with local zoning laws and building codes, typically taking 5-7 working days.

3. Tourism Industry Registration

Registration as a tourism industry is a prerequisite for hotel classification:

1. Submit application to the Department of Industry or Provincial Industry Office
2. Provide company registration documents, PAN certificate, and municipal permits
3. Submit project proposal including investment details and employment generation plan
4. Pay the prescribed registration fee
5. Obtain the Tourism Industry Registration Certificate

This registration, governed by the Industrial Enterprises Act 2076, typically takes 10-15 working days.

4. Hotel Classification Application

With the tourism industry registration complete, apply for 2-star classification:

1. Submit application to the Provincial Ministry Tourism Office
2. Provide all previous registration documents and certificates
3. Submit detailed information about hotel infrastructure, facilities, and services
4. Pay the hotel classification application fee
5. Schedule inspection of the premises

The application processing typically takes 15-20 working days before inspection is scheduled.

5. Inspection and Final Approval

The final stage involves inspection and approval:

1. Prepare for physical inspection by the Provincial Tourism Office committee
2. Demonstrate compliance with all 2-star hotel standards during inspection
3. Address any deficiencies identified during inspection
4. Receive the inspection report and classification recommendation
5. Obtain the official 2-star Hotel Registration Certificate upon approval

The inspection and final approval process may take 20-30 days depending on the readiness of the facility and the committee’s schedule.

Post-Registration Compliance

Ongoing Regulatory Requirements

After obtaining 2-star classification, hotels must maintain compliance with various regulations:

• Annual renewal of the hotel registration certificate with the Provincial Tourism Office
• Regular tax filings with the Inland Revenue Department
• Compliance with labor laws including the Labor Act 2074 (2017)
• Adherence to food safety standards under the Food Act 2023 (1966)
• Maintenance of guest registration records as per the Immigration Act 2049 (1992)

Quality Monitoring and Inspections

The Provincial Tourism Office conducts periodic inspections to ensure continued compliance with 2-star standards. These inspections evaluate:

• Maintenance of physical infrastructure
• Quality of services provided
• Staff training and competence
• Hygiene and cleanliness standards
• Guest satisfaction levels

Non-compliance may result in warnings, fines, or revocation of the 2-star classification.

Frequently Asked Questions

What is the minimum investment required for a 2-star hotel in Nepal?

The minimum investment varies by location, but typically ranges from NPR 30-50 million for a 15-room 2-star hotel in urban areas. The Industrial Enterprises Act 2076 classifies tourism businesses based on investment thresholds, with medium-scale enterprises requiring investments between NPR 20-100 million.

How long does the entire registration process take from start to finish?

The complete registration process from company registration to obtaining the 2-star hotel classification certificate typically takes 3-4 months. This timeline assumes all documentation is in order and there are no major compliance issues identified during inspections.

Can foreign investors establish a 2-star hotel in Nepal?

Yes, foreign investors can establish hotels in Nepal. The Foreign Investment and Technology Transfer Act 2075 (2019) allows foreign investment in the hotel industry. However, foreign investors must obtain approval from the Department of Industry and comply with additional documentation requirements.

What are the annual renewal requirements for a 2-star hotel registration?

2-star hotels must renew their registration annually with the Provincial Tourism Office by submitting renewal applications, paying the prescribed fee (approximately NPR 15,000-25,000), providing tax clearance certificates, and undergoing a simplified compliance inspection.

Are there any tax incentives for establishing hotels in Nepal?

Yes, the Income Tax Act 2058 (2002) provides certain tax incentives for tourism businesses, including a 20% income tax rebate for hotels established in specified remote or underdeveloped areas. Additionally, customs duty exemptions may apply to certain imported equipment for hotel operations.

How strict is the inspection process for 2-star classification?

The inspection process is thorough and evaluates compliance with all prescribed standards. The inspection committee typically includes representatives from the Provincial Tourism Office, hotel association representatives, and technical experts who assess infrastructure, services, safety measures, and environmental compliance.

Can a hotel upgrade from 2-star to a higher classification later?

Yes, hotels can apply for upgrades to higher classifications by submitting applications to the Provincial Tourism Office, demonstrating compliance with the higher category standards, paying the applicable fees, and undergoing a new inspection process. The upgrade process is similar to the initial registration but focuses on the additional requirements for the higher classification.