Think Big

Desh Bandhu Basnet

CHAIRMAN AB HOLDING

Desh Bandhu Basnet, known informally as Ajit within his personal circles, is a professional engineer who has established a notable presence within the country’s business environment. Over a period approaching two decades, Basnet has systematically diversified his footprint across various economic sectors. In recent years, his firm, AB Holdings, has concentrated investments within the hospitality industry. His business philosophy is characterised by both vision and ambition, specifically through the introduction of international brands into the Nepali market and the fostering of indigenous projects designed for sustainable, long-term expansion.

Beyond his commercial endeavours, Basnet holds several significant ancillary positions. He presently serves as the Chairman of the Tourism and Air Transport Committee of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), in addition to his diplomatic role as the Consul of Zambia in Nepal.

Basnet is a principal impetus behind several of Nepal’s more ambitious hospitality ventures, notably the recently spotlighted Mercure Kathmandu. He maintains the conviction that innovation, strategic collaboration, and focused destination development are fundamental prerequisites for effectively positioning Nepal on the global tourism map.

In a dialogue with Business 360, Basnet, in his capacity as Chairman of AB Holdings, elaborates upon his strategic vision, as well as the prevailing challenges and opportunities he forecasts for the future of tourism in Nepal. Excerpts:

Too often, discussions are dominated by what the government is doing or not doing. But in my view, the government’s role is to facilitate, to act as a bridge, much like FNCCI does between the public and private sectors. Let us not dwell on government action alone. Let us focus on what we as entrepreneurs, citizens and stakeholders can do. I am proud to be Nepali and I believe in the opportunities this country offers. With the right mindset, innovation and collaboration, Nepal can stand tall as a tourism powerhouse.

What inspired you to bring Mercure to Nepal? How did the collaboration happen?

Over the last six years, Nepal has welcomed several international hospitality brands, especially from America and Asia. Marriott, for instance, arrived not too long ago, and many other well-known names soon followed. But when you look at the market closely, one important gap was clear: Nepal lacked a strong European brand. This struck me as particularly significant because European tourists make up nearly 14% to 17% of the total tourist arrivals in Nepal today. To me, it was obvious that Nepal needed to host a global chain with European roots to connect better with this important segment of visitors. That is why I decided to bring Mercure, one of the biggest European-origin brands in the world, into Nepal. Globally, Accor, the group that owns Mercure, operates more than 5,700 hotels across 110 countries. With Nepal, that number has now reached 111. And I am proud that the very first property under the Accor umbrella here is Mercure Kathmandu.

What are the biggest challenges in integrating international brand standards into the local context?

The main challenge is that international standards cannot simply be ‘added on’ later. They have to be built into the project from day one. The entire planning process from the size of the rooms to the layout of staff areas, follows a different approach compared to local norms. For example, in Nepal, the back office and staff spaces are often small. But globally, these spaces are designed to be large, communal and comfortable so that employees can work efficiently and feel valued.

This is actually my second experience with an international brand. My first is Mercure, and the second, Ramada, was signed within just four months of each other. What international brands bring is a sense of consistency: a guest staying at Mercure in London or Paris should feel the same quality of service at Mercure in Kathmandu. Of course, the investment is significant, and it comes with hurdles but the end result is worth it. For me, it is an honour to be part of the Mercure family.

Another important aspect is that international standards push the entire ecosystem upward. Fire and life safety approvals, for example, are mandatory which means our infrastructure becomes safer. Staff members also undergo training that aligns with global best practices lifting their skills to international levels. This, in turn, opens opportunities for Nepali hospitality workers not just in Nepal but worldwide.

In recent years, we have seen a clear shift, the hospitality sector in Nepal is evolving. Private investors are putting in resources and the government is also recognising the importance of skilled manpower. Many Nepalis have gone abroad, especially to the Middle East, for work. But if we can build capacity here, the benefits will be shared by everyone.

How are you positioning Mercure in Kathmandu with all the current competition?

Personally, I do not look at hospitality in terms of competition. Each brand and property has its own character, its own charm. Marriott and Hilton are certainly strong names but they are strong in their own right. What matters to me is not outdoing them but offering our guests the best possible service.
Mercure Kathmandu is well-positioned geographically. It is close to the Ring Road and the airport, and major landmarks like the Boudhanath Stupa are nearby. Accessibility is a big advantage. But more than the location, it is the overall experience we are trying to create that sets us apart.

In the five-and-a-half months since we opened, Mercure Kathmandu has already established itself with an excellent culinary offering. Our food selection is among the best in the market. We are building our reputation around service quality and that, in my view, will only improve with time.
Of course, Mercure Kathmandu is still in its infancy but my vision is clear, we want to set a new benchmark in the hospitality industry in Nepal.

How do you balance global brand consistency while highlighting Nepal’s unique culture and hospitality traditions?

This balance is at the heart of Mercure’s philosophy. Mercure globally is known for blending international standards with local culture and we have tried to embody that here in Kathmandu.

If you walk into our property, you will notice clear elements of Nepali culture whether in the decor, food or the events we celebrate. We give special focus to traditional Nepali cuisine and festivals. For instance, our menus highlight authentic dishes and our calendar includes cultural celebrations that resonate with local traditions. Guests can experience Nepal not just outside the hotel but within its walls as well.
Without this cultural integration, an international brand in Nepal would feel incomplete. We are not just offering a place to stay, we are offering a destination that reflects the essence of Nepal. That is the only way to truly succeed here.

What do you feel are the challenges currently plaguing the hospitality sector and what are some opportunities within it?

Challenges and opportunities go hand in hand. The private sector contributes nearly 80% to Nepal’s economy and within that tourism stands out. Despite political instability, economic hurdles and a lack of government subsidies, tourism has consistently proven resilient. It has never declined, in fact, it keeps growing.

The reason is simple, tourism in Nepal is homegrown. We are using our natural beauty, cultural heritage and authentic experiences to create products that appeal to the world. These are sold in dollars, making tourism a direct contributor to foreign exchange earnings. Unlike other industries, tourism does not rely on government support or export incentives. It sustains itself and that is its greatest strength.

Looking ahead, I see Nepal’s hospitality sector expanding significantly. With more international brands entering, standards are improving and with them, so are opportunities for employment, training and global exposure. If we continue on this path, tourism could become not just one of Nepal’s strongest industries but a global example of how a small country can leverage its unique strengths.

Looking closely, there are two players working: the government and the private sector. If the private sector has contributed around 80%, then what has the government done?

First and foremost, there are two aspects we need to separate: the physical and the technical. Let us take the tourism end controversy as an example. It has been an issue since long, yet it is only recently that serious steps have been taken to address it. On the physical side, the conversation naturally turns to infrastructure.

Today, while Nepal is eager to attract more tourists, the government is adding burdens through taxation. With 13% VAT and a 2% luxury tax, visitors end up paying nearly 15% more here than in other destinations.That is not a competitive position. 

Some months ago, under my leadership, my team presented a proposal to the Parliament highlighting that Nepal must decide its tourism model. Should it follow Bhutan’s premium model or should it aim to be a competitive destination? The government must make its stance clear.

We even tried to raise the issue of the 13% air ticket surcharge with the government but were not heard. What Nepal needs urgently is a proper infrastructure policy. In key tourist cities like Pokhara and Bhairahawa, roads are outdated. Many have not been upgraded for nearly a decade. A dedicated government team should be working in these areas to ensure they meet the expectations of international travellers.

If the government focuses on infrastructure and technical improvements simultaneously, Nepal can genuinely rise to become one of the most successful tourist destinations in the world. I have seen firsthand that people love Nepal not because of polished roads or airports but because of its people. Our culture says ‘Atithi Devo Bhava’, which means ‘Guests are Gods’, and visitors feel that warmth. If the government can just solve technical issues and commit to infrastructure, the possibilities are endless.

What kind of policies are you anticipating? What are the expectations?

Nepal needs to start acknowledging the hotel industry as a vital sector in its own right. I saw this transformation happen over the years, and today, hotels are one of the most important investment areas in Nepal. But to sustain this growth, government support is essential.

Hotels are long-term investments, often spanning decades. That means investors need confidence in stable policies. One clear step would be to offer loans at single-digit interest rates. If the government creates such a space, more people who have not yet invested in hospitality will be encouraged to do so.

At the same time, there are pressing issues that need attention: the tourism end controversy, challenges faced by travel agencies, Environmental Impact Assessment (EIA) hurdles, and the difficulties hotels in areas like Chitwan continue to face. Unless these are addressed, the industry will not reach its true potential.
For me, the bottom line is simple, the government must recognise that tourism is the only sector capable of uplifting the entire country in a meaningful way.

How do you assess the recovery of Nepal’s tourism industry post-Covid?

When I was building my hotel during the height of Covid, many people advised me to stop. They thought it was a bad idea to invest in hospitality at such a time. But I kept going. Looking back, I feel it was the right decision because the industry has not just recovered but transformed.

Before the pandemic, tourism in Nepal was already strong but post-Covid people are travelling even more. Hotels that once seemed ambitious are now full of life. The attitude towards infrastructure has also shifted, where people once hesitated about high-rise hotels, now they accept them as part of the urban landscape.
Of course, Nepal still has policy and infrastructure gaps but with gradual improvements, tourist arrivals will continue to rise. Consider India as an example: tourism contributes about 2.5% to its GDP, yet only 8.7% of its population even has a passport. That means 92% do not and for many of them, Nepal is the first international destination they choose because of our open borders. This alone gives Nepal enormous potential.

Too often, we focus only on the negatives, what we lack, what has not been done. But if we emphasise our strengths and improve step by step, Nepal’s future in tourism is extremely bright. And we are already seeing results. More international brands like Marriott and IGH have entered Nepal. Each new brand helps promote Nepal globally. Mercure is part of this wave and I believe its presence will add another layer of credibility to Nepal as a destination.

Which markets or segments should Nepal focus on?

There are several but one promising segment is Meetings, Incentives, Conferences, and Exhibitions (MICE) tourism. I visited India recently for MICE-related discussions and saw how much potential Nepal has in this space. With the right infrastructure and promotion, Nepal can become a regional hub for conferences and business gatherings.

Another area is cultural and religious tourism. Take Janakpur, for example, the place where Ram and Sita were married. Many people believe that if they marry there, they will be blessed. These stories and traditions can be developed into unique tourism products. Nepal is full of such possibilities that we have not yet fully tapped into.

How important is sustainable tourism for Nepal? 

Sustainability is not a buzzword, it is a necessity. But it is also a complex and multi-layered concept. At Mercure, we are working in practical ways. For instance, we use reusable water bottles instead of single-use plastics. We also collaborate with local authorities on sustainable road development and contribute to restoring community spaces like nearby temples.

These may seem like small steps but together they create a community-based model of tourism that lasts. To me, that is true sustainability, projects that involve and benefit the local community while also protecting the environment.

How do you think Nepal’s economy will evolve with tourism’s contribution over the next decade?

To be frank, apart from tourism, Nepal does not yet have a strong, stable industry with long-term potential. Hydropower is often treated as a political tool. Other sectors, like cement and steel, are functioning but lack stability. Many industries rely too heavily on exports to India or China, which makes them vulnerable to political shifts. Tourism, however, is different. It cannot be stopped by politics or policy shifts. Tourists will always want to come to Nepal and this makes it the most sustainable industry we have. Agriculture could also be long-term but it is constrained by labour shortages and the high cost of technology. For a country with only around 29 million people, investing heavily in tech-based agriculture is difficult.

That is why I believe tourism is the only industry that deserves a comprehensive 10-year policy plan. If the government commits to this, tourism will not only uplift the economy but also reshape Nepal’s global identity.
Besides trekking and mountaineering, what segments of  tourism have strong potential for Nepal?
I have always spoken about two areas in particular. The first is ‘destination investment’. A few days ago, I met with the CEO of the Investment Board and we discussed how destinations like Rara have incredible potential but lack even the most basic infrastructure. Imagine if the government introduced a policy offering a 20% tax holiday for 20 years to anyone investing in hotels and infrastructure there. That one step would open the doors to real growth.

The second is positioning Nepal as an ‘entertainment hub’ for India and China. If the government created policies allowing foreigners to build large-scale entertainment hubs, say on 1,000 to 2,000 ropanis of land, it would bring in a completely new stream of visitors. I recently met a Singaporean investor interested in building a major casino in Nepal, but without clear policies, these opportunities remain untapped. Right now, we need regulations around casinos and nightclubs, because demand exists but the framework does not.
Beyond that, mountaineering and sports tourism are expanding, with rafting drawing more interest. Religious tourism also has vast, underutilised potential. Look at Lumbini, birthplace of Lord Buddha, and yet it only attracts relatively very few visitors annually with 76,210 foreigners visiting the place in 2023. That is a fraction compared to the global Buddhist population.

And then there are emerging opportunities: medical tourism, ecotourism, wellness tourism. In India, for example, I saw a significant number of Africans seeking medical care. Nepal has a natural advantage with its climate, where Delhi can be unbearably hot, Nepal offers diverse, comfortable environments. If we package and market these advantages well and if the government supports such efforts, Nepal can diversify far beyond trekking and mountaineering.

What is the potential for public-private partnerships in tourism? 

Every major project has to involve a public-private partnership (PPP) if it is going to succeed. Take airports as an example. The Adani Group has acquired seven or eight airports in India but progress has been uneven. Without PPP models, projects struggle to balance scale with efficiency.
The logic is simple, the private sector brings financial motivation and operational efficiency, while the public sector controls land and infrastructure. A site like Dubar Marg, for instance, could never be purely private, it is a public asset. That is why projects like airports, highways or even large-scale resorts should always involve PPP.

If Nepal wants to scale up, we need to attract international investors, World Bank-level funding and beyond. Current private investment sizes, like Rs 500–1,000 million or even Rs 2–5 billion, are not enough for transformative development. Nepal cannot leap forward on small funds alone. We need big, structured and transparent investments under PPP frameworks to grow.

How do you rate Nepal Tourism Board’s work?

I usually avoid commenting directly on other organisations but I will say this, ‘innovation is non-negotiable’. I have been in the hotel industry for four years now and my entire focus has been on introducing innovation to Nepal’s hospitality. Development and prosperity cannot happen if we simply repeat what we have been doing for decades.

If I were in charge, I would benchmark Nepal against the world’s best destinations. I would sit down for coffee with tourism ministers in countries like Switzerland or France and learn how they turned small cities into global tourism hubs. That is the vision we should aspire to.The problem in Nepal is that many people are satisfied with ‘good enough’. But ‘good enough’ will not put us on the global map. For the past 30 years, the Tourism Board has focused mainly on budgets, never on the full experience of food, travel or hospitality. They are doing ‘well’ but we need to do our ‘best’. That requires a complete shift in mindset, not only in the board but also among ministers and entrepreneurs.

At the end of the day, tourism is about experience. From the moment a visitor enters Nepal to the moment they leave, the journey should feel seamless, welcoming and memorable. Right now, that is not always the case. Fixing this requires innovation and commitment, not just budget allocations.

Right now, you have three projects underway. Could you tell us about them?

Currently we are working on three projects. In Kathmandu, we are preparing to open another Ramada which should be ready by December if all goes as planned. Beyond the capital, I am also turning my focus to Purbanchal where I come from. The Asian Highway project connecting Bangladesh, Bhutan, India and Nepal is underway, and once it is complete, Itahari will be at the centre of exciting new opportunities. That is why we have launched a 10-year vision project called ‘AB World’. It is being developed on 30 bighas of land that I inherited from my father. The project will feature a massive convention centre, the largest resort in the area along with a wellness centre, housing developments and even casinos to create vibrant nightlife. We are set to begin construction within the next four or five months. This project is very close to my heart. It is not just about building hotels, it is about showing what is possible in Nepal when you think big. It is my dream project and I believe it will set a new benchmark for destination development in the country.