Nepal recorded approximately 1.07 million international tourist arrivals in 2024, a figure that suggests recovery to near pre-pandemic levels. The Nepal Tourism Board celebrated the number. Examined more closely, the composition reveals structural weaknesses that aggregate arrivals data obscures.
Indian visitors, who cross the open border and are not always captured in official counts, account for an increasingly large share of arrivals. Their average length of stay is shorter, their per-night spend lower, and their propensity to stay in formal hotels weaker than visitors from OECD countries. Chinese arrivals, which before 2020 were Nepal's fastest growing source market, have recovered slowly and remain well below their 2019 peak. Western visitors, the high-value, long-stay trekkers and climbers who contribute disproportionately to foreign exchange earnings, are recovering but remain price-sensitive to Kathmandu's airport connectivity and accommodation quality.
The leakage problem
Tourism's economic contribution depends not just on how many visitors arrive but on how much of their spending remains in the domestic economy. This is the leakage question. For Nepal, leakage is severe. High-end lodges import food, beverages, and furnishings. Trekking permits fund government accounts but do not reliably reach trail communities. Climbing expeditions bring logistics and oxygen bottles from abroad. A significant portion of tour operator bookings is made through Indian or international aggregators who capture the margin before the traveller lands.
Research by the International Centre for Integrated Mountain Development estimated that for every $100 spent by a foreign visitor in Nepal, between $40 and $55 leaks out of the domestic economy through imports, profit repatriation, and payments to foreign intermediaries. For mountain climbing expeditions, the leakage is even higher. The high-cost, foreign-branded end of Nepal's tourism sector extracts substantial foreign exchange while returning relatively little to local value chains.
Kathmandu's hotel glut
The years between 2015 and 2020 saw a dramatic expansion of hotel room supply in Kathmandu. Post-earthquake reconstruction unlocked land, and rising arrivals projections encouraged developers to build. By 2019, Kathmandu had more 5-star rooms than at any point in its history. Then came COVID-19, and occupancy rates collapsed to near zero for two years.
Recovery has been real but uneven. Average occupancy across Kathmandu's formal hotel sector reached approximately 62% in 2024. This is adequate for operational viability but not for servicing the debt many properties accumulated during construction and the pandemic. Average room rates remain below 2019 levels in dollar terms, as properties compete aggressively for the recovering visitor base. Several hotel groups remain in financial distress or have quietly renegotiated their loan terms with banks.
The Everest economy
Everest is Nepal's most recognised export. The spring climbing season on the Sagarmatha massif generates permit revenues, porter employment, tea-house income, and a global media profile that no marketing budget could replicate. In 2023, a record 478 permits were issued for Everest at $11,000 each, generating nearly $5.3 million in permit fees alone. This is before accounting for the multiplier of logistics, staffing, and equipment spending in the region.
And yet the Everest economy is increasingly contested. Overcrowding in the death zone has become a genuine safety issue and a reputational liability. The fixed-rope system that makes summit bids commercially viable for less experienced climbers has altered the character of high-altitude mountaineering. The Sherpa community, whose labour underpins every expedition, has seen income rise substantially but works in conditions that carry mortality rates multiple orders of magnitude above any regulated industrial sector.
The connectivity constraint
Tribhuvan International Airport handles virtually all international arrivals. It is one runway. It operates below international safety standards on several metrics. It is congested for much of the day and closed to large widebody aircraft. Pokhara International Airport opened in 2023 after years of delay, but international airline uptake has been limited. The airport's catchment is insufficient to sustain the frequency that would make it viable as a hub. Gautam Buddha Airport in Bhairahawa is similarly underutilised.
The airline connectivity problem is self-reinforcing. Without enough seat capacity, load factors on existing routes remain high and fares expensive. This discourages marginal visitors, which makes it harder to justify additional frequencies, which keeps capacity constrained. Nepal's aviation market is essentially a monopoly corridor connecting Kathmandu to a handful of Asian hubs, through which the entire tourism economy must pass.