Kathmandu: The Shangri-La Hospitality Group, which is aggressively expanding Nepal’s luxury hotel sector with new five-star projects at three locations, has seen its construction costs rise significantly.
The company, which operates several hotels across the country, reported that costs for some of its new properties have exceeded initial estimates.
Operating a five-star hotel in Kathmandu since 1979, the group has accelerated its nationwide expansion and conducted a credit rating assessment accordingly. The rating report shows that costs for two of its under-construction hotels have risen sharply.
The group plans to upgrade its existing hotel in Pokhara into a five-star property while also building two new resorts in other locations.
According to the company’s rating report, costs have increased for Lost Horizon Pvt. Ltd. in Begnas, Pokhara, and Lost Horizon Safari Resort & Spa in Meghauli, Chitwan.
Lost Horizon Pvt. Ltd. (Begnas, Pokhara)
The luxury hotel being built by Shangri-La Hospitality Group at Begnas, Pokhara, has seen its cost rise substantially. Initially estimated at Rs 1.495 billion, the total projected cost has now reached Rs 2.131 billion, an increase of Rs 636 million.
According to the company, this represents a 43 percent increase from the original estimate. The rise is mainly due to the addition of 40 more rooms to the project.
The group is developing the property under the InterContinental Resort Pokhara Begnas brand and has achieved 66 percent financial progress so far.
The newly added 40 rooms will be built at a lower cost per room compared to the first phase. The first phase included 40 suite rooms, each costing Rs 39 million, while the second phase will add 40 more rooms at Rs 27 million per room.
The company plans to complete construction and begin operations by December 2026. The project is jointly funded by Prasiddha Bahadur Pandey and Praveen Bahadur Pandey, with Rs 1.076 billion in rated short-term and long-term loans.
The group has rated Rs 140 million for long-term and Rs 72 million for short-term loans. Combined, costs for the two hotels have risen by roughly Rs 2 billion.
Lost Horizon Safari Resort & Spa (Meghauli, Chitwan)
The resort under construction in Meghauli, Chitwan, has also seen cost escalation. The estimated cost has risen by Rs 631 million, from Rs 1.295 billion to Rs 1.926 billion.
The company reports that the resort has achieved 53 percent financial progress, with most physical structures completed. Mechanical, electrical, and plumbing works are currently underway.
The resort, to be operated under the InterContinental Resort Chitwan Meghauli brand, will be developed in multiple phases similar to the Pokhara project.
The company plans to finance 72 percent of the investment through loans. In the first phase, 40 suite rooms have already been built, and another 40 luxury rooms will be added in the second phase, aiming for operation by December 2026.
Prasiddha Bahadur Pandey is also the main investor in this project. The company has rated Rs 937 million in long-term loans for this resort.
Hotel Shangri-La Village Pvt. Ltd. (Gharipatan, Pokhara)
The cost of upgrading the Hotel Shangri-La Village in Gharipatan, Pokhara, has remained stable. The hotel, currently a four-star property with 61 rooms since 1996, is being upgraded to a five-star standard.
The company plans to invest Rs 1.192 billion to complete the upgrade and started reconstruction in July 2023. About 80 percent of the investment will be financed through loans.
Once completed, the hotel will operate under the Hotel Indigo brand and include a casino.
Each room is expected to cost about Rs 12 million to build. The project will expand from 60 rooms to 100 rooms in total.
Ownership distribution is as follows:
Praveen Bahadur Pandey – 48 percent
Prasiddha Bahadur Pandey – 30 percent
M/S Mayur International Pvt. Ltd. – 18 percent
Darpana Pandey – 2 percent
Sumita Pandey – 2 percent
Mary Pandey – 1 percent
The four-star hotel recorded business worth Rs 82 million in 2020, Rs 130 million in 2019, Rs 122 million in 2018, and Rs 87 million in 2017.
For its upgrade, the company rated Rs 949 million in long-term loans.
As of now, 90 percent financial progress has been achieved, with the hotel originally scheduled to open by March 2025. However, operations are now expected to begin in January 2026.
Partnership with IHG
The Shangri-La Hospitality Group’s hotels under construction across Nepal will be marketed and managed by the International Hotel Group (IHG). The group signed an agreement with IHG in 2022 for branding, marketing, and management. IHG, a leading global hotel operator based in Europe, manages hotels worldwide under the InterContinental brand.
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