Nepal - Kathmandu Tourism Project

RESTRICTED Report No. PT-4a This report is for official use only by the Bank Group and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF THE KATHMANDU TOURISM PROJECT NEPAL February 2, 1972 Tourism Projects Department Currency Equivalents Currency Unit - Nepalese Rupee (NR) US$ 1.00 = 10.125 1 NR = US$ 0.1 1,000,000 NRs = US$ 98,765 Units of Weights and Measures: Metric Metric: British/U.S. Equivalents 1 m = 3.28 ft 1 m 10.76 sq. ft. 1 km= 0.62 mi 1 km2 0.386 sq. mi 1 ha = 2.5 acres 1 m ton 0.98 1g ton - 1.1 U.S. sh ton Principal Acronyms Used IDA International Development Association NIDC = Nepal Industrial Development Corporation RNAC = Royal Nepal Airlines Corporation ADB = Asian Development Bank Fiscal Year 1/ July 16-July 15/ 1/ Approximately - based on lunar calendar Table of Contents Page No. SUMMARY i-ii 1. INTRODUCTION 1 2. BACKGROUND 1 A. The Country and its Economy 1 B. The Tourism Sector 2 3. THE PROJECT 4 A. The Sponsors 4 B. Description 4 C. Management and Staffing 6 D. Cost Estimates 8 E. Execution 9 4. JUSTIFICATION 11 A. Market Demand 11 B. Economic Justification 13 5. FINANCIAL ASPECTS 15 A. Financial Aspects 15 B. Financial Forecast 17 6. RECOMENDATIONS 20 ANNEXES ANNEX 1 - Economic Justification ANNEX 2 - Assumptions for Financial Analysis ANNEX 3 - The Nepal Industrial Development Corporation ANNEX 4 - The Sponsors ANNEX 5 - Interest Rates in Nepal This report is based on the findings of a mission to Nepal by Mr. Hayman, Mr. Renkewitz and Mr. Vera in July 1971. Table of Contents (Cont'd.) Table No. Statistical Appendix Tourist Arrivals by Month and Means of Transport, 1968-1970 1 Tourist Arrivals by Nationality, 1968-1970 2 Breakdown of Total Project Cost 3 Estimated Schedule of Expenditures and Disbursements 4 Contingency Allowance 5 Hotel de ltAnnapurna Schedule of Accommodation 6 Estimated Schedule of Expenditures 7 Estimated Schedule of Disbursements 8 Interest and Commitment Charge 9 Projected Profit and Loss Statement 10 Projected Financial Position 11 Projected Cash Flow 12 Depreciation Schedule 13 Yak and Yeti Hotel Schedule of Accommodation 14 Estimated Schedule of Expenditures 15 Estimated Schedule of Disbursements 16 Interest and Commitment Charge 17 Projected Profit and Loss Statement 18 Projected Financial Position 19 Projected Cash Flow 20 Depreciation Schedule 21 Import Duties, Surcharges and Sales Taxes 22 Chart 1 - Schedule of Implementation, Expenditures and Disbursements MAPS Map No. 1 - IBRD 3382 - Main Tourist Assets of Nepal Map No. 2 - IBRD 3383 - Tourist Attractions of the Kathmandu Valley Key to Map No. 2 - IBRD 3383 Map No. 3 - IBRD 3648 - Nepal - Kathmandu City NEPAL APPRAISAL OF THE KATHMANDU TOURISM PROJECT SUMMARY i. This report appraises a project to provide additional hotel accommodation in Kathmandu, for which an IDA credit of US$ 4.2 million is proposed. The project has two components -- the remodelling and extension of the existing 90-room Hotel de I'Annapurna into a 241-room hotel of first class international standard; and the construction of a new second class hotel of 120 rooms, to be called the Yak and Yeti Hotel. ii. Nepal has many attractions for the foreign visitor, including magnificent scenery, opportunities for climbing and trekking, and a rich cultural heritage. Kathmandu is the main entry point of foreign tourists, as well as being an important tourist destination in its own right. iii. Some 46,000 non-Indianl/ foreign tourists visited Nepal in 1970, arrivals having grown steadily at an average rate of 37% a year since 1965. Although gross receipts of foreign exchange from tourism probably did not exceed US$ 2 million equivalent in 1970, prospects for further expansion are considered excellent. International tourism is by far the most promising means open to Nepal for earning hard currency. With the Asian Development Bank project for the improvement of Kathmandu airport in progress, the main constraint on the growth of tourism is the shortage of suitable hotel rooms. The additional accommodation to be financed by the proposed credit lies well within even the most conserva- tive estimates of future demand, and average annual rates of room occu- pancy of 75% for the Hotel de l'Annapurna and 70% for the Yak and Yeti Hotel are expected. iv. The sponsor of the Hotel de l'Annapurna sub-project is the Hotel de l'Annapurna Pvt. Ltd. of which the three shareholders are mem- bers of the Royal family. The shareholders of the Hotel Yak and Yeti Pvt. Ltd. are a British citizen experienced in the hotel business and an Indian citizen, both having many years' association with Nepal. Suitable arrangements will be made for the management of both hotels. v. The total investment in the two sub-projects, including land, contingencies, the valuation of the existing assets, interest and other charges during construction, and working capital is US$ 7.37 million equivalent. The proposed IDA credit of US$ 4.2 million would cover the 1/ Indians are not shown in the immigration statistics. An estimated 4,000 Indians arrived by air in 1970. - ii - total estimated foreign exchange costs of the project. The balance of the required financing would be provided by the sponsors. Cost esti- mates have been reviewed during negotiations, to take account of recent instability in the sub-continent, and currency changes. No significant changes to the estimates were required, ample contingency allowances hav- ing been provided. vi. Contracts for civil works and the supply of equipment will be awarded in accordance with IDA's guidelines for international competi- tive bidding. vii. The sub-projects will be carried out by the sponsors, with the assistance and supervision of the Nepal Industrial Development Corpora- tion (NIDC). Each sponsor will select a suitably qualified project man- ager to supervise construction on their behalf. The NIDC will act on behalf of the Government in channeling the IDA credit to the sponsors of the two sub-projects, and in so doing will receive a service charge from the Government. It is proposed that the IDA funds should be relent through the NIDC for a term of 24 years, including a 4 years' grace period, at a rate of interest of 7-1/2% per annum. viii. The Hotel de l'Annapurna is expected to achieve a financial rate of return on a discounted cash flow basis of between 8.8% and 10.6% on the total investment, depending on the assumptions made on rates of room occu- pancy and on the date of opening of the extension. The rate of return for the Yak and Yeti Hotel on the same basis ranges from 7.4% to 9.4%. Debt service cover is adequate for both. On the lending terms proposed, the return on equity would range from 10.0% to 15.2% for the Hotel de l'Anna- purna, and from 7.6% to 12.3% for the Yak and Yeti Hotel. ix. Best estimates of the economic rate of return are 20% for each hotel. The differences between the financial and economic rates of return are due to adjustments for taxes and to the inclusion of an estimate of the net benefit accruing as a result of the expenditure of hotel guests on shopping and sightseeing outside the hotels. The whole project will create about 500 additional jobs, and the net direct foreign exchange earnings are likely to be of the order of US$ 2.8 million equivalent per annum at full operation. x. The project is suitable for an IDA credit of UJS$ 4.2 million. The borrower would be the Kingdom of Nepal. NEPAL APPRAISAL OF THE KATHMANDU TOURISM PROJECT 1. INTRODUCTION 1.01 The Government of Nepal has long recognized the opportunities offered by the expansion of tourism. In the fall of 1970 it asked IDA for assistance in developing the sector. 1.02 A project identification mission visited Nepal in February 1971, followed by a preparation mission in March, and an appraisal mis- sion consisting of Messrs. Hayman, Renkewitz, and Vera in July. These missions confirmed that Nepal could greatly increase its foreign exchange earnings fram tourism, provided more good hotel accomodation was built. After reviewing several hotel projects, two were selected for immediate consideration. 2. BACKGROUND A. The Country and its Economy 2.01 The Kingdom of Nepal is a land-locked country bordering on Tibet in the north, and India, its main trading partner, in the east, south, and west. Roughly 800 km long and 170 km wide (about the same total size as Greece), it is divided into three distinct physical regions extending in an east-west direction for the length of the coun- try. These are the relatively fertile Terai plains in the south; the hill country of central Nepal, including the Kathmandu Valley; and the Himalayas, the world's highest mountains, in the north. The central and northern regions are crossed by deep valleys running generally from north to south. The country's resources are few and the terrain over much of its area makes communication extremely difficult. Nepal's population of some 11 million is estimated to be growing at about 2.2% per year -- roughly the same rate of growth as the GDP. Per capita GDP of about US$ 70 equivalent a year is among the lowest of the developing countries. Over 90% of Nepal's population is engaged in agriculture which, including forestry, accounts for around 70% of GDP. The countrj is still in the first stages of economic development, consisting of many loosely-linked valley economies. A large part of the population remains outside the money economy. 2.02 Nepal's foreign trade is dominated by its relationship with India, which takes about 90% of its total exports, mostly foodgrains - 2 - and other food products. Apart from merchandise exports, the country's most important sources of foreign exchange are gurkha remittances and pensions. While tourist receipts are still very small (officially esti- mated at UJS$ 1.3 million equivalent in 1969/70, less than 5% of total receipts of convertible foreign exchange), the prospects for growth in tourist receipts seem better than for other sources of convertible cur- rencies. Gurkha remittances and pensions will decline, with reduced recruitment. Market prospects for jute and jute products are rather uncertain. Other resources, such as musk and animal skins are believed to be in danger of depletion. B. The Tourism Sector 2.03 Nepal is a beautiful and exotic country which until recently was forbidden to outsiders. The world's most tremendous mountains chal- lenge increasing numbers of climbers and trekkers, while in the hills and valleys a colorful way of life continues, largely unchanged for cen- turies. In the jungles of southern Nepal are rare species of wild ani- mals. The birthplace of Buddha at Lumbini is a center of pilgrimage. 2.04 The ancient cities of the Kathmandu Valley were created by a unique mingling of cultures. Temples, monasteries, old markets, carv- ings, and statues abound, around which revolves a complex calendar of festivals, ceremonies and fairs in which Buddhist and Hindu practices are often unselfconsciously combined. The many ornate palaces of the Ranas are witness to an autocratic regime which was displaced as recently as 1951. 2.05 The climate of Kathmandu is generally pleasant, and -does not impose a seasonal pattern on tourist arrivals, except insofar as some flights may be cancelled during the rains, particularly in June. This difficulty should be largely resolved by airport improvements in the region. 2.06 The main constraints on the growth of tourist traffic to Nepal have been limited air services and the lack of suitable hotel accommoda- tion. The former is being relieved by the ADB airport program and the initiative of the airlines. The proposed credit would alleviate the lat- ter. 2.07 Nepal has seen rapid and sustained growth in numbers of foreign visitors. Excluding Indians, 46,000 foreigners visited Nepal in 1970, an average annual rate of increase in arrivals of 37% since 1965. Due to the close ties between Nepal and India, Indian citizens do not complete the same immigration formalities as other foreigners, and consequently are not included in the immigration statistics. The Department of Tour- ism estimates that some 4,000 Indians visited Kathmandu by air in 1970. In addition there are many thousands of unrecorded crossings of the long - 3 - land frontier between Nepal and India, which, if included in the statis- tics, would greatly increase the total number of Indian arrivals. Due to the cancellation of some tourist groups during 1971, attributed to unsettled conditions elsewhere in the sub-continent, it is expected that the total number of foreign arrivals during the year will be about the same as in 1970 2.08 Seventy-nine percent of non-Indian foreign tourists reached Nepal by air in 1970. Road improvements and the growing popularity of "mini-trek" type holidays have however been accompanied by an increasing proportion of road visitors, including many young people from Europe and the United States. 2.09 Gross foreign exchange receipts from tourism were officially estimated at US$ 1.3 million equivalent in 1969/70. Since a substantial volume of tourist transactions is believed to pass through unofficial channels, this is probably an underestimate, a more likely figure being of the order of US$ 2 million equivalent in 1970. 2.10 There are at present 558 rooms in hotels classified by the Department of Tourism throughout Nepal, of which 500 are in Kathmandu: a variety of unclassified accommodation is available, which could appeal only to the spartan. Another 124 rooms are currently being built in a second class hotel some distance from town, and 15 in the form of bunga- laws on the outskirts. There is also a proposal to add 170 rooms to the existing first class Soaltee Hotel. 2.11 Visitors have in general been prepared to accept lower stand- ards of accommodation and service in Kathmandu than they would expect as a matter of course elsewhere. Only four hotels with 318 rooms between them can be considered as offering services approaching medium grade hotels in, say, Bangkok, Singapore, or Hong Kong. 2.12 The proposed project would add 271 rooms, almost doubling capacity in the higher category hotels. It would provide Kathmandu for the first time with a hotel comparable in standard to international class hotels in other countries. The existing better class hotels are very heavily booked during much of the year, therefore much of the new capacity would provide for presently unsatisfied demand. With the pros- pective growth of traffic high occupancy rates are expected. 2.13 Present scheduled air services link Kathmandu with Bangkok, Rangoon, Calcutta, Delhi, Patna and Benares. Air routes from Kathmandu westwards therefore at present involve a change of flight in India. Royal Nepal Airlines Corporation (RNAC) are considerin4g new routes, over which they are planning to operate jet equipment. The runway of Kathmandu airport will be extended under the ADB airport program to 10,000 feet by the start of full operation of the hotel project, enabling aircraft of the DC8/B707 type to operate without undue restrictions. Improvements are also being made in lighting and navigational aids. Foreign airlines will become increasingly interested in negotiating traffic rights to Kathmandu, once the airport is improved, and once new hotel acconmoda- tion is under construction: more hotel accommodation of the appropri- ate standard is a prerequisite for improved air connections. The geo- graphical situation of Nepal gives special significance to interna- tional air services. 3. THE PROJECT 3.01 The project consists of the refurbishing and extension of the Hotel de l'Annapurna and the construction of the new Yak and Yeti Hotel. These particular hotels were selected from several possibilities for a number of reasons, which included their suitability to the needs of the market, their probability of being implemented, their technical and financial viability, the prospects for sound management, their size, the experience of the sponsors, their state of preparation, and their location. A. The Sponsors 3.02 The sponsor of the Hotel de l'Annapurna is the Hotel de l'Anna- purna Pvt. Ltd. The shareholders are H.R.H. 1st Queen Mother Kanti Rajya Laxmi Devi Shah, H.R.H. 2nd Queen Mother Iswari Rajya Laxmi Devi Shah, and H.R.H. Princess Helen Shah. The company was formed in March 1971, with an authorized capital of NRs. 20 million of which NRs. 6.4 million is paid up. The company owns the existing Hotel de l'Annapurna, which was oper- ated under an interim management agreement by Hilton International up to the end of 1971. Details of the current operation are given in Annex 4. 3.03 The Yak and Yeti Pvt. Ltd. has two main shareholders. Mr. Radesham Saraf is an Indian citizen having substantial industrial and trading investments in Nepal. Mr. Lissanevitch is a British national, who has been living in Nepal for about 20 years. He has had many years of experi- ence of the hotel and catering business, first in India, then for 12 years as manager of the Royal Hotel, Kathmandu, and currently as owner of the successful Yak and Yeti restaurant. For a further description of the sponsors, see Annex 4. B. Description 3.04 The Hotel de l'Annapurna Pvt. Ltd. owns the freehold of the land required. The Yak and Yeti sub-project will be on land that is partly free- hold and partly leasehold, arrangements for the purchase of land for an access road having also been agreed in principle by the present owners, the NIDC. Assurances were obtained during negotiations that legal opinion would be furnished that land title and conditions of leases meet the requirements of the project. Hotel de l'Annapurna 3.05 The existing hotel is located in central Kathmandu, near the Royal Palace and within walking distance of the old city. The present structure was opened in 1965 and has three floors offering 90 guest rooms, one dining room, a small bar, and two small shops. The entrance lobby and reception area are small and frequently congested. The exte- rior appearance of the hotel, and the interior design of public and guest rooms are modest. 3.06 The project will create round the nucleus of the existing hotel new accommodation of first class international standard, while permitting the present hotel to remain open. One hundred and fifty nine new rooms will be built, and 82 of the present rooms refurbished to give a total of 241 twin-bedded rooms. Eight of the existing rooms will be eliminated to make space for enlarged public areas. Central air-conditioning and a cen- tral hot water system will be installed. A coffee shop, a main dining room and a speciality restaurant will be provided, and lounge and bar space expanded. A swimming pool with a patio bar will be built, and the tennis courts relocated and improved. The hotel will have its own laun- dry and drycleaning facilities. 3.07 Exterior design and interior decoration will be to a high stand- ard, and careful attention will be paid to landscaping. 3.08 The sewage system which services the existing hotel is also ade- quate for the extension. Electricity is available from the town supply, and the hotel will have its own water purifying and softening plant, for which an adequate supply will be available from the municipality. The Yak and Yeti Hotel 3.09 The site for this hotel is in the grounds of an old palace, which houses the present successful Yak and Yeti restaurant. It is located in central Kathmandu, a few hundred yards from the Hotel de l'Annapurna. The grounds include a small lake, and the site lends itself to attractive landscaping. Access to the present restaurant involves a long detour around side streets, so the project provides for a new access road directly from one of Kathmandu's main thoroughfares, on land to be acquired from the NIDC. Preliminary agreement on the purchase of this land was confirmed during negotiations. 3.10 The proposed hotel will have a basement and four floors, and will offer 24 single rooms, 84 twin-bedded rooms each with a balcony, and 6 suites each of which can be used as two double rooms. Bedrooms will not be air-conditioned, but individual units will be provided for - 6 - suites and public rooms. Provision is made for a coffee shop and a bar, together with access to the Yak and Yeti restaurant in the old palace. 3.11 Other facilities are to include a swimming pool, tennis courts, a sauna, and a roof garden. The preliminary drawings by a Nepalese archi- tect suggest that the exterior of the hotel will be simple and attractive. Maximum use will be made throughout of local wood carvings and other handicrafts, and the high standard of interior design evident in the pre- sent Yak and Yeti restaurant will be maintained. 3.12 The hotel will be connected to an existing sewage system. Elec- tricity and water supplies from the municipality will be adequate, and the hotel will have its own water purifying and softening plant. C. Management and Staffing 3.13 The existing Hotel de l'Annapurna had an interim management agreement with Hilton International Company, a subsidiary of TWA, since March 1970. At the mutual request of both companies, this interim agree- ment was terminated at the end of 1971. A full management agreement is still in force, providing for Hilton technical assistance during con- struction of the extension, marketing and training services, and Hilton management of the upgraded hotel on its completion. Hilton operates 52 hotels around the world, for which management agreements are broadly the same. In the case of the Hotel de l'Annapurna, these provide for direct costs being charged against the operation, Hilton receiving a basic man- agement fee of 5% of total sales plus an incentive payment of 10% of gross operating profit. 3.14 Hilton has introduced some training schemes for the staff of the Hotel de 1'Annapurna. These will be expanded in the future, to have well-trained local staff available for the start of operation of the extension. So far, four Nepalese supervisors have been sent to Hilton hotels in the region for training. 3.15 The extended hotel will provide employment for 46 persons, of whom 15 will initially come from abroad. Such foreigners will work at the supervisory level and will have had broad experience in hotel opera- tions. The government's policy is to authorize the employment of for- eigners if qualified Nepalese are not available. Given Hilton Interna- tional's experience in opening and operating ?)tels, the management arrangements are considered satisfactory. If for any reason either party should wish to withdraw from the agreement, similar arrangements could be made with one of a number of other experienced hotel operating companies. In view of the size and standards of the extended hotel, the assistance of a specialized management company is considered essen- tial, the arrangements being subject to IDA approval. -7- 3.16 The management of the Yak and Yeti Hotel will not be assigned to a hotel management firm. One of the two shareholders, Mr. Lissane- vitch has broad experience in the hotel and catering industry, and man- aged the Royal Hotel in Kathmandu for many years. His present restau- rant is widely known and has an excellent reputation. Provision will be made to hire well-qualified expatriate staff for managerial and profes- sional levels. Of 290 employees, 30 already work in the existirg restau- rant, and 7 will be recruited abroad. The assistant to Mr. Lissanevitch holds degrees from Swiss and American hotel schools. Furthermore, Mr. Lissanevitch's three sons are to be trained abroad in hotel manage- ment. No major difficulties should, therefore, arise in the management and staffing of the hotel. IDA will approve the qualifications and expe- rience of the manager to be engaged. 3.17 The Government has been helped by the International Labour Organisation in preparing a request to the United Nations Development Program for assistance in setting up a Hotel Training School in Kathmandu. Whilst both the Hotel de l'Annapurna and the Yak and Yeti Hotel can make satisfactory training arrangements of their own, the establishment of such a school will further improve the supply of qualified staff. - 8 - D. Cost Estimates 3.18 The estimated costs of each sub-project are given in Tables 3, 6, and 14, and are summarized below: Table I Hotel de l'Annapurna % of Nepalese Rupees, Millions U.S. Dollars, Millions Base-line Local Foreign Total Local Foreign Total Cost 1. Construction: Siteworks 0.25 0.58 0.83 0.02 0.06 0.08 2.4 Buildings 7.16 16.33 23.49 0.70 1.62 2.32 70.5 Professional Services 0.78 0.79 1.57 0.07 0.09 0.16 4.9 2. Equipment: 1.43 5.07 6.50 0.16 0.49 0.65 19.8 3. Project Management: 0.30 - 0.30 0.03 - 0.03 0.9 4. Technical Assistance: 0.05 0.39 0.44 x 0.04 0.04 1.2 5. Pre-Opening Expenses: 0.03 0.12 0.15 x 0.01 0.01 0.3 Base-Line Costs: 10.00 23.28 33.28 0.98 2.31 3.29 100.0 6. Contingencies: Price Increase (14%) 1.24 3.11 4.35 0.12 0.31 0.43 13.1 Physical Increase (12%) 0.93 2.77 3.77 0.10 0.26 0.36 11.0 TOTAL 12.17 29.16 1.33 1.20 2.88 4.08 Yak and Yeti Hotel 1. Construction: Siteworks 0.25 0.57 0.82 0.02 0.06 0.08 5.2 Buildings 3.37 7.53 10.90 0.34 0.74 1.08 69.7 Professional Services 0.35 0.34 0.69 0.03 0.04 0.07 4.5 2. Equipment: 0.56 2.01 2.57 0.05 0.20 0.25 16.1 3. Lanr: for access road 0.28 - 0.28 0.03 - 0.03 1.9 4. Project Manaement: 0.10 - 0.10 0.01 - 0.01 0.7 5. Pre xn 0.08 0.28 0.36 x 0.03 0.03 1.9 Base-Line Costs: 4.99 10.73 15.72 0.48 1.07 1.55 100.0 6. Contingencies: Price Increase (14%) 0.61 1.48 2.09 0.07 0.14 0.21 13.5 Physical Increase (12%) 0.46 1.15 1.61 0.05 0.11 0.16 10.3 TOTAL 6.06 13.36 19.42 0.60 1.32 1.92 TOTAL PROJECT COST1/ 11 7! 7 7.20 .0 INTERES AND OTHER CRARGES DURING CONSTRUCTION 5.87 - 5.87 0.58 - 0.58 1/ Excluding land for hotel construction - x less than US$ 5,000 Note: Totals may not add due to rounding. -9- 3.19 The compounded annual rate of increase of civil works costs is estimated to have been between 8.5% and 9.0% in the last ten years. Assuming that the increase in prices will continue at the same rate, a provision of 15% of construction costs and 12% of siteworks costs is included in the contingency allowance given in Table 5. In addition, an allowance of 10% of the cost of construction and siteworks, and 15% of equipment and professional services has been made to meet any costs unforeseen at this time. This is appropriate in this case, since detailed estimates must await the final design stage, and also because of difficulties that may arise in the transportation of materials. Dur- ing negotiations cost estimates were reviewed with the sponsors, and no significant changes were considered necessary. Amount of the Credit 3.20 The proposed credit of US$ 4.2 million would cover the foreign exchange costs of the project, which amount to 64% of the total project costs plus interest and other charges during construction. Most building materials, equipment and specialized labor are imported. The sponsors would finance the remainder, as specified in paragraphs 5.01 and 5.03 below. E. Execution 3.21 The proposed credit will be channeled from the Government to the sponsors through the Nepal Industrial Development Corporation (NIDC). For a discussion of the NIDCts organization and financial condition, see Annex 3. 3.22 The NIDC was set up in 1959, is fully Government owned, and is the country's only industrial development bank. In its first eleven years it approved total loans of NRs. 140 million for 154 projects, of which NRs. 55 million was actually disbursed for 115 projects. It has appraised around 30 hotel projects, of which it has financed 13. It has therefore, built up substantial experience of the workings of the hotel industry in Nepal. The NIDC employs over 200 people, and many of the professionals are well qualified. 3.23 The NIDC's financial position has been weak, due in part to the management's inability to enforce timely repayment from some of its bor- rowers. Executive assistance from the ADB is under discussion, with a view to putting into effect firmer policies in this respect. 3.24 The NIDC will be responsible for overall supervision, coordina- tion with other government agencies, coordination with the sponsors, and liaison with IDA. It will be required that the NIDC allocate enough staff time from properly qualified engineers, procurement officers, and accountants to ensure that each sub-project is effectively supervised. Day-to-day supervision on behalf of the sponsors, and their liaison with the NIDC, will be provided by a project manager for each sub-project, - 10 - their qualifications being subject to IDA approval. IDA will approve final drawings for all construction works. 3.25 It is proposed that the cost to the NIDC in acting on behalf of the Government in supervising and administering the sub-loans be covered by a service charge. During negotiations, the professional staff time and other resources that the NIDC would need to commit in order to suoervise the sub-projects effectively were reviewed. The NIDC estimated that their cost for providing these services on behalf of the Government would be covered by a service, charge of US$ 20,000 equivalent per year during the first four years of the project, and JS$ 4,000 per year during the rest of the life of the sub-loans. The arrangements were accepted in principle by the Government and NIDC representatives. The risk of any possible default will be borne by the Government and not the NIDC, since the NIDC will repay the sub-loans to the Government only to the extent that it receives repayment frot the sponsors. The sub-loans will not be included in the NIDC's balance sheets. Construction Period 3.26 It is planned that construction would be completed within a 2-1/l-year period; the period of implementation for both sub-projects would spread over 3 years, including defect liability periods of 9 months, as shoin in Chart 1. Procurement 3.27 Civil works and equipment supply contracts costing the equiva- lent of uS$ 50,000 or more for each separate project item would be awarded under international competitive bidding in accordance with IDA's guidelines. Items would be grouped to the extent practicable to encour- age such competitive bidding. Local manufacturers of furniture would be allowed a preferential margin of 15% of c.i.f. costs of competing imports or the existing rate of duty, whichever is lower. The two project man- agers and their consultants would be responsible for evaluating bids, on the basis of which evaluations the NIDC would recommend contracts for IDA approval. Only two qualified building contractors are established in the country, both of them employing specialized Indian sub-contractors, but it is expected that many foreign contractors would submit bids. Whether domestic or foreign contractors should win the bids, the foreign exchange component in total project costs would vary little, as both domestic and foreign contractors need to import most materials, equipment and special- ized labor. A pre-qualification system acceptable to IDA would be intro- duced to ensure that only properly qualified contractors would be permit- ted to submit bids for the construction of the hotels. Detailed lists of furniture and equipment will be submitted for IDA approval prior to pro- curement. - 11 - Disbursement 3.29 The proposed credit would be disbursed on the basis of the c.i.f. costs of imported equipment and furniture and the ex-factory cost of locally produced furniture; the foreign exchange costs of technical assistance and professional services; and appropriate percentage of civil works, and pre- opening expenses. The estimated foreign exchange components are shown in Table 3. These percentages would be adjusted as necessary so that withdrawal would be distributed over the project implementation period. A schedule of disbursement is shown in Table 4. Savings, if any, after completion of the project would be expected to be cancelled. 4. JUSTIFICATION A. Market Demand 4.01 The existing supply of accommodation has virtually reached satura- tion, and the two leading hotels are heavily booked during peak seasons. Nepal's tourist industry can therefore expect only very modest growth until more hotel rooms of appropriate standard are available. 4.02 United States tourists make up the largest share of foreign non- Indian arrivals, over 30% in 1970: the British, French and German accounted for about 11% each. Some of these would have been expatriates living in neighboring countries, but most are visiting Nepal in the course of a round-the-world or Far East tour. About 80% of foreigners come by air, although a gradually increasing proportion have been coming by road. 4.03 Many tourists visiting Nepal at present are also visiting India. As new air routes develop, and as Nepal becomes more of an accepted destina- tion in its own right, the proportion doing so may well drop. In the short term, however, Nepal stands to gain by steps India takes to improve its tourist facilities. Having only 18,000 hotel roams suitable for foreign tourists at present, India is constructing another 7,000 and the officially stated intention is to build another 10,000 by 1973. Some 290,000 foreign tourists visited India in 1970, and a target has been set of one million by 1978. 4.04 Nepal is also included in tours which go on to Bangkok and the Far East. Thailand received some 629,000 foreign visitors in 1970, of whom some 333,000 originated by nationality in America, Europe and the Middle East (excluding American service personnel). Even if these tourist arrivals to Thailand should grow at a conservative 10% per year, then by 1978 they would amount to some 1.4 million. - 12 - 4.05 Nepal can also appeal strongly to the Japanese market. Though Japanese arrivals are as yet few in absolute terms, Japanese groups have been reaching Kathmandu in increasing numbers, both for sightseeing and trekking. The importance of promoting Nepal in Japan is fully recognized by the Department of Tourism. Some 330,000 Japanese went overseas on vacation in 1970, an average rate of growth since 1966 of 40% per year. Recent studies indicate that this figure could grow to between 2 and 2.7 million by 1978, on conservative assumptions. The great circle mileage between Japan and Nepal is less than that from Japan to, for example, Hawaii or Fiji. 4.06 World tourism expenditures have been growing at around 12% per year. Further expansion is expected, as rising incomes in the main mar- kets are accompanied by better transport and accommodation facilities, more sophisticated travel marketing, more leisure time and earlier retirement, and lower holiday prices in real terms. Nepal's share of total tourist movements will probably remain so small that its success in attracting tourists will be almost entirely determined by the hotel and transport supply it can offer. Nevertheless, there are a number of discernible trends in world tourism which suggest that market demand for a destination such as Nepal will remain particularly strong. Such trends include the tendency to move further afield as established desti- nations become more congested and conmonplace; group and charter fares tending to lower the travel cost barrier to distant destinations; the growing popularity of round-the-world travel; the growth in activity holidays, such as trekking; and the increasing number of second holi- days pe2 year. 4.07 The Government has formulated a tourism policy which should enable Nepal to realize its tourism potential. Visas and trekking per- mits are readily granted, but any steps which can be taken to improve the facilitation of tourists still further should be encouraged. The GovernmientIs civil aviation policy recognizes the central role that both Royal Nepal Airlines Corporation and foreign airlines will have to play in supporting the growth of tourism. 4.08 Although Nepal is now an attractive tourist destination, some future developments will enhance its appeal still further. The comple- tion of the road to Pokhara and the improvement of its airport will enable two-center holidays to be effectively promoted. Pokhara lies near a lako beneath the spectacular Machhapuchhare Peak, and is an estab- lished center for trekking. The expansion of the road network through- out the Kathmandu Valley will open up many beautiful areas to convenient sightseeing, Lumbini, the birthplace of Buddha, lies some 130 miles by air to the west of Kathmandu, a few miles on the Nepalese side of the border with india. Imaginative and ambitious plans are being made to build a unique religious center there, for which funds are being sought from many sources, including governments of countries with large Buddhist populations. Building such a center at Lumbini will publicize Nepal, and a numbe- of pilgrims will also wish to visit major Buddhist shrines in Kathmandu. - 13 - 4.09 Hotels in Nepal face the risk that their occupancy rates are vulnerable to political disturbances, strikes, or serious epidemics in any one of the other countries which are included in the itinerary of tourists visiting Nepal. This element of risk will decrease as new air routes and more tourist facilities and promotion enable Nepal to develop as a main destination instead of a stopover on a multi-country tour. The 75% and 70% rates of room occupancy taken as the higher assumption for the Hotel de l'Annapurna and the Yak and Yeti Hotel respectively are considered to be achievable when good and bad years are averaged together. The existing hotels that offer acceptable inter- national standards have begun to show high rates of occupancy of their available accommodation. The additional capacity provided by the pro- posed sub-projects will achieve the higher rates of occupancy assumed in the financial projections not later than 1978 if tourist arrivals grow at less than 13% compound per year, even if the proposed 170-room extension to the Soaltee Hotel is built. This rate of growth is far below historical rates. The Yak and Yeti Hotel, by providing comfort- able accommodation, well-managed, with good food, at prices below those of the Hotel de l'Annapurna, will meet the needs of an important seg- ment of the market not well catered for in Kathmandu at present. B. Economic Justification 4.10 The economic justification for the project is reviewed in Annex 1. 4.11 The net benefits to the economy will consist primarily of expenditures of additional guests in the hotels, less the cost of oper- ating the facilities. The related investments are the capital costs of the hotels, negligible additional infrastructure being required. Other benefits included in the calculation of the economic rate of return are those deriving from the expenditures of the additional tourists visiting Nepal as a result of the project on visas, shopping, and sightseeing. Taxes and duties have been eliminated from the financial costs, and the 5% Government sales tax added to financial benefits. 4.12 The best estimate of the internal economic rate of return would be 19.9% for the Hotel de l'Annapurna, 20.8% for the Yak and Yeti Hotel, and 20.2% for the two combined. The rates of return are sensi- tive to the assumptions made on rates of roam occupancy and the dates of opening: a reduction of 5 percentage points in room occupancy, together with a delay of 12 months in opening the new accommodation, lowers the economic rates of return to 16-2% for the Fotel de l'Anna- purna, and 16.8% for the Yak and Yeti Hotel. 4.13 The effect of the economic rate of return of shadow pricing foreign exchange and labor was tested. A shadow exchange rate of 14 rupees to the dollar, as against the official rate of 10.125, raised the rates of return by 5 percentage points for the Hotel de 1'Annapurna and 4 percentage points for the Yak and Yeti Hotel. A shadow wage rate for semi and unskilled labor of 40% of actual wages raised the rates of return by 3 percentage points and 2 percentage points for each hotel respectively. Shadow pricing has however not been used to calculate the best estimate of economic rate of return. 4.14 The project will directly create some 500 new jobs. It will moreover stimulate employment in the handicraft and tour operating indus- tries, and will provide a base for trekking and climbing expeditions. The latter employ relatively large numbers of porters in remote areas of the country. Indirect employment effects cannot be quantified, but may be substantial. Other benefits which could not be quantified include those derived from increased embarkation taxes, landing fees, and improved load factors for Royal Nepal Airlines. 4.15 When in full operation from 1978 onwards, the project is expected to increase direct gross foreign exchange earnings by UE$ 4.8 million equivalent per year, more than double estimated gross tourism receipts in 1970. Net earnings of foreign exchange may be estimated at US$ 2.8 million equivalent per year, including US$ 0.3 million equivalent per year in net receipts from shopping, etc. These earnings compare with the estimated foreign exchange cost of the project of US$ 4.2 million equivalent. - 15 - 5. FINANCIAL ASFECTS A. Financing Plan 5.01 The total estimated financing requirements of the project with interest during construction are expected to be as follows: Table II Financing Plan (US$ Million) Est. Project Cost Including Land for Hotels, Capitalized Existing Assets, % of Interest Working Capital Total Total Hotel de l'Annapurna Equity: Hotel de l'Annapurna Pvt. Ltd. 1.21 0.64 1.85 36 Long-Term Debt H.M. Government 3.28 3.28 64 4.49 0.64 5.13 100 Yak and Yeti Hotel Equity: Yak and Yeti Pvt. Ltd. 0.60 0.14 0.74 33 Long-Term Debt H.M. Government 1.5O 1.50 67 2.10 0.14 2.24 100 The equity contribution of the Hotel de 1'Annapurna Pvt. Ltd. will include cash to the equivalent of US$ 1.21 million as well as land valued at the original price of acquisition of US$ 0.08 million, exist- ing assets valued at US$ 0.46 million, and working capital of US$ 0.10 million. Existing assets have been valued at their book values at the time of opening. The required cash contribution will be provided out of the profits of the existing hotel in the period from 1971 to 1974 amounting to US$ 0.76 million equivalent as well as by cash contribution of the order of US$ 0.55 million equivalent. - 16 - 5.02 The long-term debt of US$ 3.28 million equivalent is to con- sist of two parts. The IDA credit amounting to US$ 2.88 million for the foreign exchange requirements of the sub-project, and the capital- ized interest during construction of US$ 0.40 million. The capitalizing of interest and other charges during construction is justified in view of the relatively large scale of expansion proposed, and the risk of pos- sible loss of business due to disturbance and inconvenience during the construction period. 5.03 In the case of the Yak and Yeti Hotel, the equity contribu- tion will amount to the equivalent of US$ 0.74 million including cash of US$ 0.60 million, land valued at the original acquisition price of US$ 0.05 million and existing assets valued at US$ 0.05 million, as well as working capital of US$ 0.04 million. The loan will comprise US$ 1.32 million for the foreign exchange requirements and US$ 0.18 million for capitalized interest and other charges during construction. 5.04 The NIDC will act for the Government in on-lending to the sponsors of the two sub-projects. Each sub-loan agreement will be sub- ject to IDA approval. Each sub-loan will carry an interest rate of 7-1/2% per annum, plus a commitment charge of 1/4% per annum on the undisbursed balance: these are the standard conditions available to hotel projects in Nepal. The signature of the respective sub-loan agreement will be a condition of effectiveness of that part of the credit allocated to the sub-project. 5.05 The term of each sub-loan will be 24 years, including a 4-year grace period to cover construction and the first full operating year. Terms of this length, and longer, are not uncommon in hotel financing. On the basis of the assumptions made in the financial pro- jections, both sub-projects need a term of this length and the proposed interest rate in order to be able to provide a return on equity which, although modest, is likely to prove attractive to the sponsors. The assumptions on tariffs and occupancy levels are in line with the expected level of demand, and the probable development of competitive accommodation. If these assumptions should turn out in practice to have been conservative in the event of continuing world-wide inflation after the opening date, the improved profitability of the hotels will enable them to repay their loans more quickly. This possibility is allowed for in the sub-loan agreements with each sponsor by the inclu- sion of a requirement whereby additional dividends in excess of 20% of the par value of the capital shares in any one year would be matched by an equal payment towards the accelerated repayment of the loan. 5.06 Each sub-loan agreement includes provisions for the securing of each sub-loan by the NIDC on behalf of the government by mortgages on fixed assets. Annual provisions for depreciation are expected to be not less than 6.4% of total fixed assets for the Hotel de l'Annapurna and 4.9% for the Yak and Yeti Hotel. It is required that not less than 20% of net profits after taxes will be retained in the reserves of each - 17 - company. NIDC approval will be required before any additional long- term debt is assumed. The exchange risk on the foreign exchange com- ponent of the sub-loans will be borne by the sponsors. 5.07 The equity capital will be contributed according to a sched- ule related to the financing requirements of ea-ch sub-project. In the case of the Hotel de 1'Annapurna, it will be required that no dividends are paid out during the period of implementation unless this schedule is respected. This, as well as a commitment by the sponsors to provide the necessary equity, was agreed during negotiations. In addition, per- sonal guarantees, acceptable to IDA and the NIDC based on the latter's evaluation of each sponsor's resources, will be required for each sponsor's commitment to meet cost overruns. The NIDC would, in accordance with its normal practice, be prepared to make a separate loan to cover up to 70% of such overruns. Both companies will be liable to Nepalese income taxes amounting to 45% of taxable profits, but both qualify for the 5-year tax holiday for which approved projects are eligible in Nepal. 5.08 Owners equity in the Hotel de l'Annapurna, with the general reserve, amounts to US$ 155,000 equivalent. The owners have also pro- vided an unsecured loan of US$ 507,000 equivalent. The company has a secured loan from the NIDC, of which US$ 25,000 equivalent is outstand- ing, due to be amortized by October 1974; and a small unsecured loan from the Nepal Rastra Bank. Loans to the ccmpany by its shareholders will be converted into equity before signature of the sub-loan agree- ments. 5.09 With the accumulation of retained earnings both companies might find opportunities for profitable investment. Annual capital expenditures other than replacement in excess of US$ 50,000 equivalent will, however, be made only with the approval of NIDC. 5.10 Accounts and financial statements will be kept by both com- panies in a form acceptable to IDA and the audited accounts should be presented within 6 months of the close of the financial year. Accounts will be audited by a qualified independent firm of auditors acceptable to IDA. B. Financial Forecast 5.11 Forecasts of annual earnings, financial position and cash flow for the first 21 years of the sub-projects are presented in Tables 10, 11, 12, 18, 19 and 20, and details of the assumptions are given in Annex 2. - 18 - Table III Projected Annual Earnings (US$ Million) Year Ending December 31 1975 1976 1977 1978 1985 1993 Hotel de l'Annapurna Average Annual Room Occupancy 60 65 70 75 75 75 Total Sales 2.04 2.21 2.37 2.54 2.54 2.54 Net Profit before Interest 0.25 0.31 0.39 0.47 o.48 0.48 Return on Total Investment* 4.9 6.0 7.6 9.2 9.4 9.4 Yak and Yeti Hotel Average Annual Room Occupancy 50 60 65 70 70 70 Total Sales 0.70 0.83 0.90 0.97 0.97 0.97 Net Profit before Interest 0.06 0.10 0.15 0.18 0.19 0.19 Return on Total Investment* 2.7 4.5 6.7 8.0 8.5 8.5 * Net profit before interest and dividend. 5.12 Assumptions on operating costs and revenues are based on inter- national experience, taking account of local conditions. Tariffs for the Hotel de l'Annapurna are based on present tariffs, adjusted for the up- grading of the facilities, and for price increases expected ly 1975. Tariffs for the Yak and Yeti Hotel are related to the expected range of tariffs of comparable hotels in Kathmandu in 1975. Details are given in Annex 2. 5.13 The financial return estimated on a discounted cash flow basis before direct taxes for the first 25 years of operation would lie between 8.8% and 10.6% for the Hotel de l'Annapurna, and 7.4% and 9.6% for the Yak and Yeti Hotel, depending on the assumptions made on occupancy rates and opening date. The effect of these assumptions on the rates of return are shown in Annex 2. Whilst these returns are somewhat modest, they are not unusual in areas where indirect taxation, construction costs and some operating costs are relatively high, and where opportunities for conven- tion business and sales to non-guests are limited. Return on equity before direct taxes ranges from 10.0% to 15.2% for the Hotel de l'Annapur- na, and from 7.6% to 11.3% for the Yak and Yeti Hotel, for the same set of assumptions on occupancy and opening date. If it were assumed that inflation continued at a compound rate of 3% per year over the life of the project, the range of returns on equity would be increased from 12.7% - 19 - to 18.3% for the Hotel de l'Annapurna, and from 11.C% to 15.6% for the Yak and Yeti Hotel. 5.14 Projected balance sheets and financial ratios of the two sub- projects are summarized below: Table IV Projected Balance Sheets and Financial Ratios (In US$ Million) Year Ending December 31 1975 1976 1977 1978 1985 1993 Hotel de l'Annapurna Current Assets 1.00 1.23 1.56 1.92 2.37 1.27 Current Liabilities 0.41 0.39 0.48 0.57 0.59 0.75 Net Working Capital 0.59 0.84 1.08 1.35 1.78 0.52 Total Net Assets 5.25 5.19 5.13 5.09 4.44 3.01 Long Term Debt 3.21 3.13 3.04 2.95 2.07 0.31 Original Equity and Retained Earnings 2.04 2.06 2.09 2.14 2.37 2.70 Long-Term Debt Service Coverage 2.8 1.9 2.1 2.4 2.4 2.3 Long-Term Debt Equity Ratio 61:39 60s40 59s41 58s42 47653 10:90 Yak and Yeti Hotel Current Assets 0.25 0.33 0.4 0.60 0.75 0.46 ,urrent Liabilities 0.10 0.12 0.13 0.21 0.23 0.31 Net Working Capital 0.15 0.21 0.31 0.39 0.52 0.15 Total Net Assets 2.21 2.16 2.16 2.13 1.79 1.10 Long-Term Debt 1.47 1.h3 1.39 1.35 0.94 0.13 Original Equity and Retained Earnings 0.74 0.73 0.77 0.78 0.85 0.97 Long-Term Debt Service Coverage 1.4 1.4 1.7 1.9 1.9 1.8 Long-Term Debt Eqity Ratio 67:33 66:34 64:36 63:37 53:47 12:88 - 20 - 6. RECOmiENDATIONS 6.01 During credit negotiations, assurances were obtained that: (a) arrangements acceptable to IDA will be made whereby the NIDC would act for the Government in making the IDA credit available to the sponsors under appropri- ate sub-loan agreements, and in supervising the hotel projects (paras. 3.24, 3.25); (b) arrangements acceptable to IDA will be made for project management during construction and for man- agement of the hotels during operation (paras. 3.24, 3.15, 3.16); (c) evidence satisfactory to IDA will be produced that the title to all freeholds, and the condition of all leases are such as to meet the requirements of the project (para. 3.04); (d) sub-loan agreements agreed by IDA will be concluded with each sponsor by the NIDC acting for the Govern- ment: each sub-loan will contain requirements that: (i) each sponsor will have a commitment, supported by appropriate guarantees, to provide the nec- essary equity including any additional funds required to meet cost overruns (para. 5.07); (ii) the sponsors' equity will be paid in according to an agreed schedule: neither sponsor will pay out any dividends during the period of implementation until the scheduled equity pay- ments for the given year have been made (para. 5.07); (iii) not less than 20% of the net profits of each sponsor will be added to retained earnings annually (para. 5.06); (iv) capital expenditures, except for replacement, in excess of US$ 50,000 equivalent would be committed only after NIDC approval (para. 5.09); (v) each sub-loan will be secured by mortgages on fixed assets, held by the NIDC on behalf of the Government (para. 5.06); - 21 - (vi) neither sponsor will assume any additional long- term debt during the life of the loan without NIDC approval (para. 5.06); (vii) dividends in any one year during the life of the loan in excess of 20% of the par value of the capital shares will be matched by equivalent pre- payment of the loan (para. 5.05); (viii) the sponsors will bear any exchange rate risk on the foreign exchange component of the sub-loans (para. 5.06); (e) prior to signature of the respective sub-loan agreements, evidence satisfactory to NIDC would be furnished that: (i) any past loans to each sponsor by their respec- tive shareholders have been converted into equity (para. 5.08); (ii) agreementhas been reached between the NIDC and the Yak and Yeti Hotel Pvt. Ltd. on the purchase of land for an access road (para. 3.09); (f) accounts for each sub-project shall be in accordance with modern commercial practice, and shall be audited by a qualified firm of auditors acceptable to IDA (para. 5.10). 6.02 A condition of effectiveness of the credit will be IDA approval of the arrangements between the Government and the NIDC regarding the supervision and administration of the project (para. 3.25). 6.03 A condition of effectiveness of that part of the credit allo- cated to each sub-project will be the signature of the respective sub- loan agreement (para. 5.04). 6.04 The proposed project provides a suitable basis for an IDA credit of US$ 4.2 million equivalent. ANNEX 1 Page 1 NEPAL APPRAISAL OF THE KATHMANDU TOURISM PROJECT ECONONIC JUSTIFICATION Introduction 1. Throughout this appraisal each sub-project is considered separately, and the effect on the operating results of each of any conceivable failure to implement the other is ignored. This is justi- fiable where, as in this case, the two hotels appeal to substantially different markets, and where high occupancies are expected. It is also assumed that there will be no significant diversion of business from other hotels, given the acute shortage of accommodation. 2. The net benefits to the economy will consist primarily of expenditures of additional guests in the Annapurna and Yak and Yeti hotels, less the cost of operating the facilities to be provided. The related investments are the capital costs of the hotels. Addi- tional investments in infrastructure and other facilities are negligi- ble. 3. At full operation, the new accommodation will generate some 34,000 additional tourist arrivals per year, nearly all coming by air. Consequently, Royal Nepal Airlines Corporation may expect better load factors, revenue from embarkation taxes will increase, as will that from landing fees charged to foreign airlines as a result of the addi- tional flights needed. Since such benefits would be impossible to quantify with the present state of knowledge on the plans of the air- lines, they are excluded from the benefit stream of the project. Revenue and Cost Assumptions 4. Each additional visitor can be expected to make some pur- chases during his stay in Nepal, other than what he pays for bed and board. Gross per capita tourist expenditure on shopping in India was US$ 51 in 1968/69, and tourists spent an average of US$ 48 on items other than food, lodging, local transport and entertainment in Thai- land in 1969. In the absence of expenditure surveys for Nepal, assump- tions have been made which are believed to be rather conservative. Given that expenditure on souvenirs etc. tends to be largely independ- ent of the length of stay, and that Nepal produces an attractive range of local handicrafts, an average of US$ 45 gross expenditure per tour- ist including US$ 2 for a visa is possible and may well be exceeded by the kind of tourist using bette'r class aceftmodation. The cautious assumption has been made that this expenditure would result in a net ANNE X 1 Page 2 benefit to Nepal of US$ 10 per tourist, equivalent to US$ 3 per tour- ist bed-night. 5. There is expected to be very little use of the room accommo- dation by Nepalese, at least during the earlier years of the project. Use of expatriates stationed outside Kathmandu, or while looking for permanent housing, may be significant, but there is justification for regarding much of this expenditure as foreign exchange. It is there- fore assumed that 95% of room sales will represent foreign exchange. Relatively more food and beverage sales will derive from Nepalese, either individually or as official entertaining. Entertaining by foreign embassies, airlines, etc. is treated as foreign exchange. It is assumed that only 15% of food and beverage sales should be treated as local currency. 6. It has been assumed that the average length of stay will be 2.6 nights for the Hotel de l'Annapurna, and 4 nights for the Yak and Yeti Hotel. Forty-five per cent of the Hotel de 1'Annapurna's occupied doubled rooms are expected to be occupied by 2 persons, as against 55% in the case of the Yak and Yeti Hotel. 7. The economic life of each sub-project is assumed to be 25 years. Provision is made for replacements during the lives of the sub- projects. Rate of Return 8. The economic costs and benefits of each sub-project are sum- marized below.1/Financial results have been adjusted by eliminating indirect taxes and import duties from costs and adding to the bene- fits the 5% sales tax which is levied on hotel bills. US$ 10 per tour- ist has also been added to the benefit stream to allow for the assumed net benefit arising from expenditure on shopping etc. The costs and revenues of the Hotel de l'Annapurna are the incremental costs and revenues due to the project, estimated results for the continued opera- tion of the existing hotel having been subtracted from the projected results of the enlarged hotel. 1/ The taxes and duties currently applicable to hotel operations in Nepal are shown in Table 22. ANNEX 1 Page 3 US$ Million Equivalent Hotel de l'Anppurna Yak and Yeti otel Costs- Reve- Costs Reve- Year Investment Operating nues / Investment Operating nues2/ 1 1.18 - - 0.75 - - 2 2.19 - - 0.97 - - 3 0.65 0.25 0.43 0.25 0.23 0.34 4 0.20 0.98 1.71 - 0.46 0.68 5 - 1.01 1.85 - 0.51 0.95 6 - 1.05 1.99 - 0.55 1.03 7-8 - 1.07 2.13 - 0.57 1.12 9 0.08 1.07 2.13 0.03 0.57 1.12 10-13 - 1.07 2.13 - 0.57 1.12 tI4 0.30 1.07 2.13 0.11 0.57 1.12 15-18 - 1.07 2.13 - 0.57 1.12 19 0.85 1.07 2.13 0.28 0.57 1.12 20-23 - 1.07 2.13 - 0.57 1.12 24 0.30 1.07 2.13 0.11 0.57 1.12 25-28 - 1.07 2.13 - 0.57 1.12 1/ Excluding indirect taxes and duties 2/ Including sales tax and net benefit due to shopping etc. expendi- ture. 9. The above figures are taken to represent the best estimates. They give an economic rate of return of 19.9% for the Hotel de 1'Anna- purna, and 20.8%for the Yak and Yeti Hotel, and 20.2% for the two sub-projects combined. This calculation uses the official foreign exchange rate, and the market price for unskilled labor. In view of rates of between 12 and 16 rupees to the dollar being offered in the gray market, and underemployment of labor, the effect on the rates of return of shadow pricing was tested. A shadow price of 14 rupees to the dollar, as against the official rate of 10.125 rupees, raised the economic rate of return by 5 and 4 percentage points for the Hotel de l'Annapurna and the Yak and Yeti Hotel respectively. Shadow pricing of semi and unskilled labor at 40% of the wage rates raised the rates of return by 3 and 2 percentage points respectively. 10. The economic rates of return are reduced by assuming a lower average rate of room occupancy than the 75% and 70% assumed in the pro- jections for the Hotel de l'Annapurna and the Yak and Yeti Hotel respec- tively. For example, reducing the average occupancy by 5 percentage points lowers the economic rate of return of the two hotels by 1 per- centage point each. Similarly, assuming a year's delay in the opening of the hotels would reduce the returns by 2 percentage points for each. ANNEX 1 Page 7 11L. The extended Hotel de l'Annapurna will employ 465 staff, 239 more than the existing hotel. The Yak and Yeti Hotel will employ 260 more than the 30 working in the existing restaurant. Although employ- ment figures are scanty in Nepal, it is believed that these jobs are badly needed. The hotel industry moreover provides opportunities for advancement to higher levels of responsibility, and provides some basic skills which are transferable to other service industries. The addi- tional tourists visiting Nepal as a result of the project will also stimulate employment in sightseeing and handicraft businesses. To the extent that the hotels provide a base for trekking expeditions, they will help to give employment to porters in the more remote and under- developed regions of the country. No attempt has however been made to quantify such indirect employment effects, but they may be considerable. Direct Balance of Payments Impact 12. The project is expected to increase gross foreign exchange earnings by about US$ 4.85 million per year when both hotels are fully operational, including the impact due to the expenditure of the addi- tional hotel guests on shopping, etc. This compares with estimated groEs tourist receipts of US$ 2.0 million in 1970. The import compo- nent of hotel operating costs are relatively high, but revenues are almost entirely foreign exchange. During a typical year, direct net foreign exchange earnings attributable to the project will be of the order of US$ 2.45 million plus some US$ 0.34 million due to expendi- ture on shopping etc. Once repayment of the IDA credit begins, this favorable effect on the balance of payments will be slightly reduced, by some US$ 0.1 million a year. ANNEX 2 Page 1 AS SUMPTIONS FOR FINANCIAL ANALYSIS Operating Results 1. Tables 10 and 18 present the forecast of operating results over the first 21 years of the project. The forecasts are based on Revenue and Cost assumptions described below. Revenue Assumptions 2. Total revenues include income from hotel guests and non- resident guests. Revenue comprises income from rooms, food, beverage, other operating departments, miscellaneous sales and rentals. Room income from hotel guests is based on average room tariffs differenti- ated according to single and double occupancy. Rate for % of Average Single Double Double Room Ratel/ Occupancy Occupancy Occupancy Hotel de l'Annapurna US$ 18.0 US$ 16.70 US$ 20.70 45 Yak and Yeti Hotel US$ 15.00 'US$ 13.30 US$ 16.80 60= 1/ Rates do not include 10% service charge and 5% government sales tax. 2/ Based on double rooms only, 20% of total capacity single rooms. 3. Estimates for food and beverage income are based on ratios prevailing in hotels of these types. Percentage of Total Revenues Hotel de l1'Annapurna Yak and Yeti Hotel Food 34 33 Beverage 10 15 ANNEX 2 Page 2 4. The higher ratio for beverage sales for the Yak and Yeti Hotel reflects the fact that the bar together with the restaurant will be the main social gathering point in Kathmandu both for local customers and foreigners. 5. Income from other operated departments amounts for the Hotel de l'Annapurna to 2.6% of total revenues. Because of the smaller size and the difference in the clientele this possible source of income has been disregarded for the Yak and Yeti Hotel. Only in the case of the Hotel de l'Annapurna rental income amounting to US$ 5,000 for a typical year was included in total revenue. Cost Assumptions 6. Direct material costs for food, beverage and other items have been calculated as follows: Cost of Sales Food Beverage Other Hotel de 1'Annapurna 37% 3% Yak and Yeti Hotel 42% 38% - The difference in the percentages between the two hotels reflects the distinctions in the type of operation and the resulting pricing policy. 7. Payroll and related expenses are expected in the typical year of operation to be 20.1% of total revenues for the Hotel de l'Annapurna and 21.6% for the Yak and Yeti Hotel. These percentages reflect the relatively low wages of semi- and unskilled workers in Nepal. 8. Indirect costs estimated as a percentage of total revenue (22.8 for the Hotel de l'Annapurna and 29.9 for the Yak and Yeti Hotel) include the following: Administrative and General Expenses Advertising and Sales Promotion Commissions Heat, Light, Power Operating Supplies Replacement of Operating Equipment Maintenance and Repairs. In the case of the Yak and Yeti Hotel they include also insurance and auditing fees. ANNEX 2 Page 3 9. Insurance and auditing fees as well as director's fees for the Hotel de l'Annapurna are shown separately due to the provisions of the management agreement. They account for 1.6% of total revenue. 10. Rental payments by the Yak and Yeti Hotel are shown sepa- rately and are not included in indirect expenses. They amount to 1% of total revenues. 11. The management fee of Hilton International Company for the Hotel de l'Annaparna amounts to 8.7% of total revenues. This is made up of a basic fee of 5% of total revenue plus an incentive payment of 10% of gross operating profit. 12. Average depreciation on total assets is about 6.4% per year for the Hotel de 1'Annapurna and 4.9% for the Yak and Yeti. The differ- ence reflects the fact that the Hotel de l'Annapurna has an existing building, and more equipment such as central air conditioning. Build- ing and site development are depreciated over 33 years, mechanical and electrical equipment over 15 years, furnishing over 10 years, and car- pets, curtains, bedding, etc. over five years. Pre-opening expenses and training are amortized over the first five years of operation. 13. Commitment charge and interest during construction is capi- talized for the time of disbursement, i.e. in the case of the Hotel de 1'Annapurna for three years and three months and in that of the Yak and Yeti Hotel for three years. 14. A projected Financial Position Statement, a projected Cash Flow Statement for the two sub-projects based on the forecast operat- ing results, are shown in Tables 11, 12, 19 and 20. 15. The effect on the financial rates of return, estimated on a discounted cash flow basis for the first 25 years of operation, of differing assumptions about rates of room occupancy and opening date are given below: ANNEX 2 Page b DCF Rate of Return Including Without Sunk Cost Sunk Cost Hotel de 1'Annapurna Average room occupancy 75%: opening Oct. '74 10.6 11.8 Average room occupancy 70%: opening Oct. '74 9.9 10.9 Average room occupancy 75%: opening Oct. '75 9.8 10.9 Average room occupancy 70%: opening Oct. '75 8.8 9.7 Yak and Yeti Hotel Average room occupancy 70%: opening May '74 9.4 9,6 Average room occupancy 65%: opening May '74 8.6 8.8 Average room occupancy 70%: opening May '75 8.0 8.3 Average room occupancy 65%: opening May '75 7.4 7.6 ANNEX 3 Page 1 THE NEPAL INDUSTRIAL DEVELOPNT CORPORATION 1. The Government-owned Nepal Industrial Development Corpora- tion (NIDC) was established in 1959, and is the country's only indus- trial development bank. It is able to make short- and long-term loans, and participate in equity. It has also some non-banking activities, such as a Consultancy Services Division, an Industrial Promotion and Productivity Center, and two Industrial Districts. 2. The Chairman is the Minister of Commerce and Industry, and other directors are the Secretary of Finance, the Governor of the Nepal Rastra Bank, and two prominent private businessmen. 3. The staff totals over 200, of whom 80 are professionals. The general level of competence is good, and some professionals have received training abroad, including at the Economic Development Insti- tute. 4. The resources of the NIDC, as at early 1971, stood at NRs. 78,500,000 net of repayment, of which NRs. 35,680,000 was equity. the balance being provided by loans from USAID, Kreditanstalt fuer Wiederaufbau, ExIm Bank of Japan, the Government of India, and the Gov- ernment of Nepal. 5. The last three available Balance Sheets can be summarized as follows: As at July 15 (NRs. Million) 1968 1969 1970 (Provisional) ASSETS Cash and banks 3.01 4.45 2.5 Accounts receivables 7.35 8.13 5.0 Investments: Loans 35.43 35.22 43.3 Equity 3.96 4.17 4.8 Industrial Districts 7.76 8.76 8.8 Net fixed assets 1.74 1.71 2.4 Guarantees 12.33 13.13 13.8 LIABILITIES AND EQUITY Current 5.60 1.82 1.0 Long-term borrowings 26.99 25.53 30.7 Share capital 25.72 34.12 34.4 Reserves and surplus 0.94 0.97 0.7 Guarantees 12.33 13.13 13.8 715 75.77-0. ANNEX 3 Page 2 6. In the first eleven years of operation, NIDC has approved 154 projects, for which the proposed loans totalled NRs. 140 million. Of this, however, only NRs. 5 million was disbursed, for 115 projects. Among these were 13 hotel projects, for which NIDC loans amounted to MRs. 19 million. NIDC appraisals of hotel projects have shown some attention to detail, and are in general conscientiously done. 7. The main problem the NIDC has encountered has been its man- agement's inability to insist on timely repayment from influential borrowers. In early 1971, no less than 59 loans were in arrears, interest and principal due amounting to NRs. 3.9 and NRs. 15.7 million respectively. Loans in arrears included 4 hotel projects, of which the Soaltee Hotel accounted for 99% of the amount due. The diffi- culties of the Soaltee arose partly fram the short term over which its NIDC loan was granted. Since that time, however, the Soaltee has begun to meet its obligations. The newly appointed General Manager of the NIDC appears to be able and willing to institute much firmer policies, and a general tightening up on NIDC's operations. Executive assistance from the ADB is under discussion. 8. NIDC's standard terms of long-term finance are an interest rate of 7-1/2% per annum, paid semi-annually, plus a commitment charge of 1/4% on the undisbursed balance. The term of each loan is determined according to the nature of the enterprise concerned. A grace period for the repayment of principal is granted on the basis of the length of time required for the project to be in full operation. Loans are normally secured by a mortgage on up to 75% of total fixed assets, or 80% for a project in the Industrial Districts. ANNEX 4 Page 1 THE SPONSORS The Hotel de l'Annapurna Pvt. Ltd. 1. The company was formed in March 1971, with an authorized capital of NRs. 20 million of which NRs. 6.4 million is paid up. The shareholders are H.R.H. 1st Queen Mother Kanti Rajya Laxmi Devi Shah, 2nd Queen Mother Iswari Rajya Laxmi Devi Shah, and H.R.H. Princess Helen Shah. Present Operations 2. The existing Hotel de l'Annapurna comprises 90 rooms and small inadequate public areas. Technical installations as well as furniture and decorations are not up to the standards of an inter- national four-star hotel. Lack of proper laundry facilities and inconvenient kitchen arrangements require great efforts to maintain hygienic standards. 3. A high level of demand and limited competition has made it possible to charge prices which have been out of line with the qual- ity of the accommodation. The hotel has thus been a profitable undertaking operating at an average annual room occupancy of 82%. 4. Apart from a small secured loan from the NIDC amounting to NRs. 565,904 (US$ 55,892) as of December 31, 1970 and an unsecured loan from Nepal Rastra Bank of NRs. 17,555 (US$ 1,734) the hotel is financed by the owners. Owners' equity together with the general reserve amounts to NRs. 1,568,947 (Us$ 155,129). In addition, the owners have provided an unsecured loan of NRs. 5,137,363 (uS$ 507,394). Being still exempt from income taxes under the hotel investment incen- tive arrangements, profit (1970 NRs. 1,181,151 = US$ 116,756) and inter- est on the unsecured sponsors loan amounted to NRs. 1,644,500 (US$ 162,400) resulting in a return on owners' investment of 24.5%. 5. The existing operation should generate from 1971 until 1974 cash to the order of NRs. 7.7 million (US$ 0.76 million) equivalent to 58% of the required cash investment in equity. The remaining US$ 0.55 million equivalent will be provided by the owners. The Yak and Yeti Hotel Pvt. Ltd. 6. The company has an authorized capital of NRs. 5 million and an issued capital of NRs. 1 million. Mr. Radesham Saraf and his family hold 65% of the shares, Mr. Boris Lissanevitch, the remaining 35%. The company has no trading activities at present, having been estab- lished solely to operate the new hotel. Application has been made to raise the authorized capital to NRs. 12 million. ANNEX . Page 2 7. Mr. Saraf is an Indian citizen who has built up substantial trading and industrial enterprises in Nepal. He is a director of Saraf Enterprises Pvt. Ltd., which exports commodities of Nepalese origin such as musk. He is also Managing Director of a weaving mill in Bombay, and of a Calcutta metal pipe agency. He is a partner in Messrs. Himdoot Fabrics of Calcutta, New Delhi, and Bombay, and in Messrs. Saraf Brothers of Calcutta, a leading exporter of Indian goods. He owns over 7 acres of land in central Kathmandu, a multi-story building in Calcutta, a factory and 20 acres of land in Bombay, a 100-acre tank farm in Calcutta and residential property. He has so far made investments amounting to some US$ 880,000 equivalent in Nepal and US$ 2.6 million equivalent in India. 8. Mr. Lissanevitch is a British citizen who has lived in Nepal for 20 years. He has had many years of experience in the hotel and catering business in Europe, in India, and for 12 years as manager of the successful Royal Hotel in Kathmandu, which closed when the lease expired. His restaurant sets a high standard of food, service, and interior design, and is widely known outside Nepal. Mr. Lissanevitch has a large circle of friends and contacts throughout the world, a factor which is thought to be a considerable asset for the marketing of the new hotel. His three sons are all to be trained in leading hotels in Europe. ANNEX 5 Page 1 NEPAL: KATHMANDU TOURISM PROJECT Interest Rates in Nepal The following quotation from the IMF report on Nepal dated September 1971 summarizes the latest available information on the structure of interest rates in Nepal. "The structure of interest rate was revised by the Rastra Bank effective April 14, 1971. The most signifi- cant changes involved increases in commercial bank deposit rates, changes in their lending rates for cer- tain important types of loans, and lower lending rates for agricultural credits and Rastra Bank refinancing loans to other financial institutions. IA few selected deposit interest rates are shown below: Table 18. Nepal: Commercial Bank Deposit Rates (In per cent per annum) Before After April 14, 1971 April 14, 1971 Savings deposits 4 1/2 5 Fixed-term deposits 1 year 6 7-1/2 Over 1 to 2 years 6 7-3/4 Over 2 to 3 years 6-1/2 8 Over 3 to 5 years 6-3/4 8-1/4 Over 5 years 7 8-1/2 Source: Nepal Rastra Bank ANNEX 5 Page 2 "Some of the new lending rates are shown below: Table 19. Nepal: Commercial Bank Loan Rates (In per cent per annum) Security or Before After Purpose of Loan Arril 14, 1971 April 14,A 971 Jute manufactures 9-1/2 9 Gold and silver 9-1/2 9-1/2 Foodgrains 9-1/2 10 Overdrafts 11 12 Hire purchase 12 9-1 Imports 10 12-- Export bills 7-1/2-8-1/2 7 1/ Specified categories Source: Nepal Rastra Bank "The lending rates of the financial institutions in the agricultural sector were reduced almost uniformll. For instance, for short-term credits to institutions, the rate was decreased from 8 per cent to 7 per cent per annum; for medium-term credits to institutions, from 7-1/2 per cent to 6 per cent per annum; and for long-term loans for the same purpose, from 5 per cent to 3-1/2 per cent per annum. The reductions in inter- est rates for agricultural loans to individuals were brought down in approximately the same proportion. "The Rastra Bank's interest rates for refinancing of commercial bank loans were reduced from 6 per cent to a range of 4-1/2 per cent to 5-1/2 per cent per annum, except for industrial requisites for which the rate remained unchanged at 6 per cent. Similarly, the Bank's refinancing rates for financial institutions in the agricultural sector dropped from a range of 5-5-1/2 per cent to 2-6 per cent per annum; at the same time, refinancing possibilities were extended to new types of loans, such as long-term agricultural credits." ANNEX 5 FIage 3 The Nepal Industrial Development Corporation (NIDC) is the country's only development bank. Its long-term loans carry a stand- ard interest rate of 7-1/2% per annum, plus 1/4% commitmnt charge on the undisbursed balance. Loans are secured by mortgages on fixed assets. NEPAL KATHMANDU TOURISM PROJECT TOURIST ARRIVALS BY MODE OF TRANSPORT (excluding Indian nationals) 1968 1969 1970 By By By By By By Road Air Total Road Air Total Road Air Total January 276 1,399 1,675 317 1,685 2,002 437 2,318 2,755 February 326 1,492 1,818 402 2,279 2,681 306 2,510 2,816 March 331 2,154 2,485 499 2,375 2,874 583 3,374 3,957 April 324 1,752 2,076 685 2,279 2,964 694 2,909 3,603 May 340 1,318 1,658 485 1,947 2,432 690 2,773 3,463 June 249 811 1,060 301 1,496 1,797 370 1,866 2,236 July 291 1,525 1,816 590 2,212 2,802 1,051- 3,109 4,160 August 393 1,726 2,119 900 2,165 3,065 1,063 3,979 5,042 September 520 1,258 1,778 719 1,899 2,618 989 2,544 3,533 October 457 2,274 2,731 536 3,782 4,318 928 3,627 4,555 November 522 1,912 2,434 728 3,091 3,819 1,381 3,137 4,518 December 463 2,096 2,559 609 2,920 3,529 970 4,362 5,332 Total 4,492 19,717 24,209 6,771 28,130 34,901 9,462 36,508 45,970' Source: Central Bureau of Statistics February 1972 TABLE 2 NEPAL: KATHMANDU TOURISM PROJECT 1/ TOURIST ARRIVALS BY NATIONALITY- 1968 1969 1970 Nationality United States 9,550 12,816 14,346 Great Britain 3,192 4,413 5,211 France 2,427 3,290 5,280 W. Germany 2,159 2,846 4,600 Australia 1,027 1,590 2,229 Japan 794 1,439 2,314 Canada 70C 980 1,512 Switzerland 698 651 1,421 Italy 459 827 1,468 Denmark 293 626 1,192 Other 22910 5,021 6,397 TOTAL 24,209 34,901 45,970 1/ excluding Indian citizens, who are nct required to complete the same immigration formalities as other foreigners. Source: Central Bureau of Statistics NEPAL: KATHMWANDU TOURISM PROJECT BREAKDOWN OF TOTAL PROJECT COST Rate of Exchange: US$1.00 Rupees 10.125 Land Professional Cost of Project Technical Pre-Opening Total Area Acquisition Siteworks Construction Equipnent Services P i Facilities Management Assistance Expenses (sq.ft.) NRs.(ON) NRs.(00) NRN.. (000) (000) _ (00 NRs. (000) S. (000) 1. Yak and Yeti Hotel 8h,000 283.5 816.0 10,901.5 2,571.8 690.3 1j,263.1 1,507.5 101.2 354.4 15,718.7 1,552.5 2. Hoel de l'Annapurna 165,800 830.3 23,493.0 6,500.2 1,572.4 32,395.9 3,199.6 303.7 435.4 151.9 33,286.9 3,287.6 Total Area 249,800 Total before Contingencies 283.5 1,646.3 34,394.5 9,072.0 2,262.7 47,659.0 4,707.1 404.9 435.4 506.3 69,005.6 4,840.1 Price Increase 197.6 5,149.6 1,088.6 6,435.8 635.6 Physical Increase 164.6 3,443.8 1,36o.8 339.4 5,308.6 524.3 Total Contingencies 362.2 8,593.4 2,449.4 339.4 11,744.4 1,159.9 11,744.4 1,159.9 Total after Contingencies 283.5 2,008.5 42,987.9 11,521.6 2,602.1 59,403.6 5,867.0 406.9 435.4 506.3 60,750.0 6,000.0 Foreign Exchange Component: Percentage ?o.o% 70,0% 78.0% 50.0% 70.2% 90.0% 80.0% 70.0% Total 1,405.9 29,851.6 8,986.7 1,301.0 41,728.0 4,121.3 392.0 4O5.0 42,525.0 4,200.0 February 1972 NEPAL: KAlTKAUNDU TOURISM PROJECT ESTIMATED SCHEDUIE OF EXPENDITUR'z AND DISBURSEMENTS (in US$ equivalent) Expend it u r es Disburse m en t s1/ Accummulated Undi-sbursed Quarters IDA FY and )uarter yak & Yett Annapurna Total Yak & Yeti Annapurna Total Disbursements 1/ Balance 1/ 1972 - 1973 1 June 30, 1972 103,000 61,300 164,300 - - - - 4,200,000 2 September 30, 1972 103,000 214,300 317,300 63,800 45,000 108,800 10a,800 4,091,200 3 December 31, 1972 197,800 312,000 509,800 63,800 131,900 195,700 30L,500 3,896,500 1973 - 1974 4 March 31, 1973 300,600 454,3CO 754,900 134,400 205,600 340,000 644,500 3,555,500 5 June 30, 1973 357,500 584,300 941,800 208,900 325,900 634,800 1,179,300 3,020,700 6 September 30, 1973 317,200 724,300 1,041,500 250,300 414,900 665,200 1,844,500 2,356,500 7 December 31, 1973 198,600 569,300 767,900 220,800 614,900 736,700 2,680,200 1, 61 9,doo 1974 - 1975 8 MarchT 1, 1974 133,000 408,500 541,500 139,500 404,400 643,900 3,124,100 1,076,900 9 June 30, 1974 33,300 261,000 294,300 93,600 290,600 384,200 3,508,300 691,700 10 September 30, 197 32,900 111,000 143,900 26,200 186,100 211,300 3,719,600 480,400 11 December 31, 1974 140,800 91,700 232,500 24,900 33,000 107,900 3,827,500 372,600 1975 - 1976 12 Mai T1 1975 - 290,400 290,,00 98,500 70,700 169,200 3,996,700 203,300 13 Jane 30, 1975 - - - - 203,300 203,300 4,200,000 0 1/ Excluding interest during construction and other charges. NOTE: Small differences between this table and Tables 7, 8 and 15, 16 are due to rounding. Februpry 1972 NEPAL: KATHMANDU TOURISM PROJECT CONTINGENCY ALLOWANCE land Siteworks Construction Equipment Professional Project Technical Pre-Opening Acquisition Services Management Assistance Expenses TOTAL local Foreign Local Foreign Local Foreign local Foreign Local Foreign local Fo Local Foreign local Foreign Allowance for Physical Increase n.a. 10.0% 10.0% 15.0% 15.0% n.a. n.a. n.a. Allowance for Price Increase n.. 12.0% 15.0% 12.0% n.a. n.a. n.a. n.a. Total Project Cost Before Contingencies (USmillions) 0.028 0.049 0.114 1.019 2.378 0.197 0.699 0.223 0.00 0.004 0.039 0.010 0.040 4.840 Allowance for Phsical Increase $ mllIns n.a. 0.005 0.011 0.102 0.238 0.029 0.105 0.034 n.a. n.a. n.a. 0.524 Sub-Total TuMfmillions) (1.028 0.054 0.125 1.121 2.616 0.226 0.804 0.257 0.oo 0.004 0.039 0.010 0.o4o 5.364 Allowance for Price Inn rease (US$ millions) n.a. 0.005 0.014 0.153 0.356 0.024 0.084 n.a. n.a. n.a. n.a. 0.636 TOTAL Including Contingencies US$ miilions) 0.028 0.059 0.139 1.274 2.972 0.250 0.888 3.257 0.0h0 0.004 0.039 0.010 0.04O 6.000 February 1972 NEPAL: KATHMANDU TOURISW PROJECT 3CHEDULE OF.AOMMDDATION OF THE HOTEL DE L'ANNAPURNA, KATHMANDU Rate of Exchange: US$1.00 = Rupees 10.125 Total Area Siteworks Construction Equipment TOTAL COST Type of Accommodation (sq.ft.) Hs.(OOO) NRB. (000) NRS.(000) HI7s. (000) Bedroom Area (159 new guest rooms) 67,595 269.3 9,795.0 1,055.0 11,119.3 1,098.2 Public Space 8,460 44.6 1,556.2 149.8 1,750.6 172.9 General Service Space -53,675 146.8 7,143.2 661.2 7,951.2 785.3 Concession and Sub-Rental Space 100 6.1 14.2 19.2 39.5 3.9 Food and Beverage Space 21,650 104.3 2,925.1 1,135.0 4,164.4 411.3 Miscellaneous Facilities 14,320 259.2 2,059.3 138.8 2,457.3 242.7 Sub-Total 165,800 830.3 23,493.0 3,159.0 27,482.3 2,714.3 (+3,341.2) rice n ncrease 90.2 3,427.0 832.3 4,349.5 429.6 Physical Increase 89.8 2,241.5 1,026.5 3,357.8 331.6 Total Contingencies 180.0 5,668.5 1,858,8 7,707.3 761.2 Sub-Total 1,010.3 29,161.5 5,017.8 35,189.6 3,475.5 Operational Equipment 2,303.4 2,303.4 227.5 Refurnishing of Existing Rooms 1,037.8 1,037.8 102.5 Professional Services 1,911.8 188.8 Project Management 303.7 30.0 Technical Assistance 435.4 43.0 Pre-Opening Expenses (Staff Training) 151.9 15.0 GRAND TOTAL 41,333.6 4,082.3 1/ Including contingencies February 1972 HOTEL DE L'ANNAPURNA SCHEDULE OF ACCOMMODATION Total Area Siteworks Construction Equipnent Total Total (sq. ft.) NRs. (000) NNRs.(000) NHs. (000) US(000) 1. BEDROOM AREA 121 New Bedrooms (bathroom & closet) in main block 38,922 5,463.0 38 New Bedrooms (bathroom & closet) 13,474 1,793.4 82 Upgrading of existing bedrooms (aircmditioning, heating, hot water & low voltage only) 559.9 5 Linen Areas 900 123.5 Balconies 3,300 451.6 Circulation 11,000 1,403.6 Sub-Total 67,596 269.3 9,795.0 1,055.0 11,119.3 1,098.2 2. PUBLIC SPACE Reception Foyer 2,400 441.6 Lounge (new) 1,600 294.4 Public Toilets 500 92.0 Lifts 1,360 250.2 o Circulation 2,600 478.0 Sub-Total 8,460 44.6 1,556.2 149.8 1,750.6 172.9 Total Area Siteworks Construction Equipment Total Total (sq. ft.) NRS.(000) NR. (000) NRs.(OOO) NRs. (000) UST 000 3. GENERAL SERVICE SPACE Front Office 200 27.3 Telephone and Sound Control 300 41.5 Accounts Office (new) 1,580 216.7 Offices (existing) 95.2 Luggage (existing) 5.1 Storage Areas (new) Floor 6 & Luggage Room at Floor 2 3,160 411.0 Housekeeping Room 1,200 164.0 Laundry 2,500 352.2 Men EIployees' Toilets and Lockers 2,250 317.8 Women Erployees' Toilets and Lockers 650 89.1 Supervisor's Toilet and Looker 416 56.7 Machine Room (Floor 7) 3,000 410.1 Mechanical Services 19,534 2,387.4 Engineering Store 480 65.8 Engineer's Office 145 19.2 Workshop 900 123.5 Machine Shop 4,960 673.4 Water Tanks 6,600 893.4 Garbage Cold Room 200 27.3 Circulation 5,600 766.5 0 Sub-Total 53,675 146.8 7,143.2 661.2 7,951.2 785.3 i. CONCESSION & SUB-RENTAL SPACE Shop 100 14.2 100 6.1 1T.2 19.2 39.5 3.9 Total Area Siteworks Construction Equipment Total Total (sq. ft.) mins.(0) N3RS . (000) Niss. o00 s. 000) 5. FOOD AND BEVERAGE SPACE Specialty Restaurant 1,100 171.1 Main Restaurant 2,750 375.9 Private Dining Rooms (2) 2,200 303.0 Bar 1,400 191.4 Cocktail Lounge 1,730 202.0 Snack Bar 1,000 145.8 Staff Cafeteria 1,200 162.0 Supervisor's Dining Roo 200 27.0 Pantry 1,434 184.2 Hot Kitchen 900 123.5 Cold Kitchen 500 68.6 Food & Beverage Store 2,650 352.5 Trash & Bottles 396 53.6 Purch. Mgr. Offices & Control 659 66.8 Indian Kitchen 290 39.5 Pastry 320 42.5 Pot Wash, Butcher Shop, Chef's Office 420 56.7 Dish Washing, Silver, etc. 750 102.3 Freezer 150 20.2 Circulation 1,800 236.5 Sub-Total 21,650 104.3 2,925.1 1,135.0 4,164.4 411.3 6. MISCELLANDUS Space for Fiature Discotheque 2,120 285.0 Covered Swinming Pool 7,068 1,104.6 Changing Rooms 800 122.2 Garage 2,752 341.2 s Tennis Court 70.9 Landscaping 72.9 Circulation 1,600 206.3 14,320 259.2 2,09.3 138.8 2,67.3 242.7 NEPAL: KATHMANDU TOURISM PROJECT HOTEL DE LIANNAPURNA Estimated Schedule of Expenditures (in US Dollars) Professional Project Technical Pre-Opening Quarters Siteworks Construction Equipment Services ManagEnent Assistance Expenses Total 1 5,000 53,300 3,000 61,300 2 10,000 145,000 53,300 3,000 3,000 214,300 3 10,000 290,000 9,000 3,000 312,000 4 20,000 290,000 122,300 9,000 3,000 10,000 454,300 5 15,000 435,000 122,300 9,000 3,000 584,300 6 580,000 122,300 9,000 3,000 10,000 724,300 7 435,000 122,300 9,000 3,000 569,300 8 15,000 290,000 81,500 9,000 3,000 10,000 408,500 9 15,000 145,000 81,500 9,000 3,000 7,500 261,000 10 81,500 8,994 3,000 10,000 7,500 110,994 11 10,046 81,630 91,676 12 290,365 290,365 (100,046) (2,900,365) (815,330) (178,594) (30,000) (43,000) (15,000) (4,082,335) February 1972 NEPAL: KATHMANDU TOURISM PROJECT HOTEL DE LIANNAPURNA Estimated Schedule of Disbursements (In US Dollars) Professional Technical Pre-Opening Quarters Siteworks Construction Equipment Services Assistance Expenses Total 1 - - - - - - - 2 3,500 - 26,650 14,850 - 45,000 3 7,000 93,750 - 31,150 - - 131,900 4 7,000 198,600 - - - - 205,600 5 14,000 206,150 95,394 4,500 5,850 - 325,894 6 10,500 304,500 95,394 4,500 - - 414,894 7 - 415,000 95,394 4,500 - - 514,894 8 - 304,500 95,394 4,500 - - 04,394 9 10,500 203,000 63,570 4,500 9,000 - 290,570 10 10,500 101,500 63,570 4,500 - 6,000 186,070 11 - - 63,570 4,497 9,000 6,000 83,067 12 7,032 63,671 - - 70,703 13 - 203,260 - - 203,260 14- (70,032) (2,030,260) (635,957) (89,297) (38,700) (12,000) (2,876,246) February 1972 NEPAL- KATHNANDU TDURIS14 PROJECT HOTEL DE L'ANNAPURNA INTEREST AND COMMITMENT CHARGE (In US Dollars) Interest on Total Interest Accumulated Interest & Interest & Accumulated Accumulated Undispursed during Construction Commitment Charge Commitment Charge Commitment Quarrte Expenditures Expenditures Disbursements Disbursements Balance Per Quarter Accumulated Per _jMrter Accumulated Per Quarter Accumulated Charge 1 61,300 61,300 - - 2,876,246 - - 1,798 1,798 34 34 1,832 2 214,300 275,600 65,000 65,000 2,831,246 844 844 1,770 3,568 83 117 4,529 3 312,000 587,600 131,900 176,900 2,699,346 3,317 4,161 1,687 5,255 177 294 9,710 4 454,300 1,041,900 205,600 382,500 2,493,746 7,172 11,333 1,559 6,814 340 634 16,781 5 584,300 1,626,200 325,894 708,394 2,167,852 13,282 24,615 1,355 8,169 615 1,249 34,033 6 724,300 2,350,500 41h,894 1,123,288 1,752,958 21,062 45,677 1,096 9,265 1,030 2,279 57,221 7 569,300 2,919,800 514,894 1,638,182 1,238,064 30,716 76,393 774 10,039 1,621 3,900 90,332 8 W08,500 3,328,300 Ir4,394 2,042,576 833,670 38,298 114,691 521 10,560 2,348 6,248 131,499 9 261,000 3,589,300 290,570 2,333,146 543,1oo 43,746 158,437 339 10,899 3,175 9,423 178,759 10 110,994 3,700,294 186,070 2,519,216 357,030 47,235 205,672 223 11,122 4,065 13,488 230,282 11 91,676 3,791,970 83,067 2,602,283 273,963 48,793 254,465 171 11,293 4,983 18,471 284,229 12 290,365 4,082,335 70,703 2,672,986 203,260 50,113 304,583 127 11,420 5,925 24,396 340,399 13 203,260 2,376,246 0 53.930 358,513 - 11,420 6,936 31,332 401,265 February 1972 NEPAL: KAIhMANDU TOURISM PROJECT HOTEL DE LIANNAPURSA PROJECTED PROFIT & LOSS STATFELNT (in US$ Million) Year Ending December 31 1970 1971 1972 1973 19711 975 1976 1977 1978 1979 1980 1981 1932 1983 1984 1935 1936 1987 1983 1939 1990 1991 1992 1993 1994 Fall Operational Year 1 2 3 7-- -7 ~ 7 1 0 11 1T 13 17 17 1 17 IT 2 Revenue Rooms 0.30 0.37 0.39 0.36 0.49 1.08 1.16 1.25 1.36 1.34 1.36 1.3) 1.34 1.3h 1.36 1.34 1.34 1.36 1.34 1.36 1.34 1.36 1,3i 1.36 1.36 Food 0.19 0.24 0.25 0.23 0.31 0.70 0.76 0.82 0.87 0.87 0.87 0.37 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.37 0.87 Bever-ge 0.06 0.07 0.07 0.07 0.10 0.21 0.23 0.24 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 Other 0.01 0.01 0.01 0.01 0.02 0.05 0.06 0.06 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 Total 0.56 0.69 0.72 0.67 0.92 2.06 2.21 2.37 2.5 2.54 2.54 2.54 2.5 2.5 2.54 2.94 2.9 2.9 2.9 2.9LL 254 2.9 2.94 2.54 Less Operating Costs Material 0.09 0.12 0.12 0.11 0.19 0.32 0.35 0.38 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.1il 0.41 0.61 0.41 0.41 0.41 0.61 0.41 0.41 Payroll 0.07 0.09 0.09 0.10 0.20 0.46 0.48 0.50 0.91 0.51 0.51 0.51 0.51 0.51 0.51 0.91 0.51 0.51 0.51 0.51 0.91 0.51 0.51 0.51 0.51 Tndirc cl Costs 0.18 0.26 0.27 0.29 0.26 0.54 0.55 0.56 0.58 0.58 0.58 0.98 0.98 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 Management Fee 0.03 - - - 0.06 0.16 0.18 0.20 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 Total 0.37 0.47 0.48 0.66 0.67 1.48 1.56 1.6 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 1.72 Gross Operating Profit 0.19 0.22 0.24 0.21 0.25 0.56 0.65 0.73 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.32 0.82 0.82 Less Expenses of Owning Comany - - - - 0.01 0.03 0.03 0.04 0.04 0.06 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 Gross Profit 0.19 0.22 0.2)4 0.21 0.24 0.93 0.62 0.69 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.73 0.73 0.78 0.78 0.78 0.78 0.78 Less Depreciation and Amortization of Deferred Expenses 0.03 0.03 0.03 0.03 0.11 0.28 0.31 0.30 0.31 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 Net Profit Before Interest 0.16 0.19 0.21 0.18 0.13 0.25 0.31 0.39 0.47 0.43 0.48 0.43 0.68 0.48 o.48 0.48 0.48 0.48 0.18 0.18 0.48 0.48 0.48 o.48 0.48 Less Interest 0.09 - - - - 0.12 0.26 0.24 0.23 0.23 0.22 0.21 0.20 0.19 0.13 0.17 0.16 0.19 0.14 0.12 0.11 0.09 0.08 0.07 0.04 Net Profit Before Income Tax 0.11 0.19 0.21 0.13 0.13 0.13 0.07 0.15 0.26 0.25 0.26 0.27 0.28 0.29 0.30 0.31 0.32 0.33 0.34 0.36 0.37 0.39 0.40 0.41 0.46 Less Income Tax - - - - - - - - - - 0.12 0.12 0.13 0.13 0.14 0.16 0.14 0.19 0.15 0.16 0.17 0.18 0.18 0.18 0.20 Net Profit After Tax 0.11 0.19 0.21 0.18 0.13 0.13 0.07 0.15 0.26 0.25 0.16 0.15 0.15 0.16 0.16 0.17 0.18 0.18 0.19 0.20 0.20 0.21 0.22 0.23 0.24 Dividends 0.04 - - - - 0.10 0.05 0.12 0.19 0.20 0.11 0.12 0.12 0.13 0.13 0.14 0.14 0.14 0.19 0.16 0.16 0.17 0.18 0.18 0.19 Retained Earnings 0.07 0.19 0.21 0.18 0.13 0.03 0.02 0.03 0.09 0.05 0.03 0.03 0.03 0.03 0.03 0.C3 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.05 0.05 Return on Total Investment (() - - - - - 4.9 6.0 7.6 9.2 9.4 9.4 9.4 9.4 9.4 9.6 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 1/ Net profit before interest and dividend. ,enruery 1972 NEPAL: KATHMANDU TOURISM PROJECT HOTEL DE LANNAPURNA PROJECTED FINANCIAL POSITION (in US$ million) Year Ending December 31 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Full Operational Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Current Assets Cash 0.10 0.31 0.13 0.13 0.28 0.66 0.86 1.17 1.50 1.77 1.70 1.93 2.14 2.36 2.56 1.95 2.13 2.30 2.47 2.63 0.53 0.65 0.76 0.85 0.93 Receivables 0.15 0.15 0.15 0.15 0.17 0.18 0.19 0.20 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 Inventories 0.05 0.05 0.05 0.05 0.10 0.11 0.12 0.13 0.14 0.14 0.14 0.L4 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 Other 0.03 0.03 0.03 0.03 0.05 0.05 0.06 0.06 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 TtlCretAst0.3 05 .36 0.3 0.60 1.00 1.23 1.56 1.9 2.10 2.12 2.35 2.56 2.78 2.98 2.7 2.55 2.72 2.89 3.05 0.95 1.07 1.18 1.27 1.35 Total Current Assets 0.33 0.54 0.6 06 .0 12 6 19 0 1.1 Current Liabilities Long-Term Debt Maturities 0.01 0.01 0.01 0.02 - 0.07 0.08 0.09 0.09 0.10 0.11 0.12 0.12 0.13 0.14 0.16 0.17 0.18 0.19 0.21 0.23 0.24 0.26 0.28 0.31 Payables 0.02 0.02 0.02 0.02 0.05 0.05 0.06 0.06 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 Provision for Dividend Payment - - - - - 0.10 0.05 0.12 0.19 0.20 0.11 0.12 0.12 0.13 0.13 0.14 0.14 0.14 0.15 0.16 0.16 0.17 0.18 0.18 0.19 Other 0.17 0.17 0.17 0.17 0.18 0.19 0.20 0.21 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 Total Current Liabilities 0.20 0.20 0.20 0.21 7.23 0.41 0.39 0.48 0.57 0.59 0.51 0.53 0.53 0.55 0.56 0.59 0.60 0.61 0.63 0.66 0.68 0.70 0.73 0.75 0.79 Net Working Capital 0.13 0.34 0.16 0.15 0.37 0.59 0.84 1.08 1.35 1.60 1.61 1.82 2.03 2.23 2.42 1.78 1.95 2.11 2.26 2.39 0.27 0.37 0.45 0.52 0.56 Fixed Assets (Net) Fined Assets 0.66 0.63 1.19 3.37 4.23 4.24 3.96 3.68 3.10 3.12 3.05 2.77 2.49 2.21 1.93 2.46 2.18 1.90 1.61 1.34 3.29 3.01 2.73 2.45 2.17 Deferred Charges - - 001 0.09 0.30 0.42 0.39 0.37 0.34 0.32 0.30 0.28 0.26 0.24 0.22 0.20 0.18 0.16 0.10 0.12 0.10 0.08 0.06 0.04 0.02. Total Fixed Assets 0.66 0.63 1.20 3.46 4.53 4.66 4.35 4.05 3.74 3.44 3.35 3.05 2.75 2.45 2.15 2.66 2.36 2.06 1.76 1.46 3.39 3.09 2.79 2.49 2.19 Total Net Assets 0.79 0.97 1.36 3.61 4.90 5.25 5.19 5.13 5.09 5.04 4.96 4.87 4.78 4.68 4.57 4.44 4.31 4.17 4.02 3.85 3.66 3.46 3.24 3.01 2.75 Long-Tern Liabilities09 085 059 03 Loon 0.05 0.04 0.22 1.75 2.89 3.28 3.21 3.13 3.04 2.95 2.85 2.74 2.62 2.50 2.37 2.23 2.07 1.90 1.72 1.53 1.32 1.09 0.85 0.59 0.31 (Less: Debt Maturities) 0.01 0.01 0.01 0.02 - 0.07 0.08 0.09 0.09 0.10 0.11 0.12 0.12 0.13 0.14 0.16 0.17 0.18 0.19 0.21 0.23 0.24 0.26 0.28 0.31 Total Long-Term Liabilities 0.04 0.03 0.21 1.73 2.8q 3.21 3.13 3.04 2.95 2.85 2.74 2.02 2.50 2.37 2.23 2.07 1.90 1.72 1.53 1.32 1.09 0.85 0.59 0.31 - Equity 0.75 0 .94 1 .15 1.88 2.01 2.04 2.06 2 2 2 2 2.28 2 2 2 2 2 2 2 2.61 2.65 2.70 2.75 Represented by: Share Capital 0.64 0.64 1.05 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 Retained Earnings 1/ 0 11 £03 . 0.03 0.16 0.19 0.21 0.24 0.29 0.34 0.37 0.40 0.43 0.46 0.49 0.52 0.56 0.60 0.64 0.68 0.72 0.76 0.80 0.85 0.90 Total Equity 0.75 0.94 .88 2 2.04 2.06 2.09 2.14 2.19 2.22 2.25 2.28 2.31 234 2.37 2.41 2.45 2.49 2.3 2.57 2.61 2.65 2.70 2.75 Current Ratio 2/ - - - - 2.6 :1 2.4:1 3.2:1 3.3:1 3.4:1 3.7:1 4.2:1 4.4:1 4.8:1 5.1:1 5.3:1 4.0:1 4-3:1 4.5:1 4.6:1 4.6:1 1.4:1 1.5:1 1.6:1 1.7:1 1.7:1 Long-Term Debt/Equity Ratio - - - - - 61:39 60:40 59:41 58:42 57:43 55:45 54:46 52:48 51:49 49:51 47:53 44:56 41:59 38:62 34:66 30:70 25:75 18:82 10:90 - 1/ Net of dividend provision 7/ Current maturities of LT debt as a current liability FeruFy 1972 NEPAL: KATHMANDU TOURISM PROJECT HOTEL OE LIANNAPURNA PROJECTED CASH FIDW (in US$ M4illion) Year Ending Deceber 31 1970 1971 1972 1973 1974 1979 1976 1977 1978 1979 1930 1931 1932 1983 1984 1935 1936 1937 1983 1989 1990 1991 1992 1993 1994 Full Operational Year 1 2 3 7 7 7 7 9 10 11 1 137 7 7 7 17 1 7 T Source: Cash at Beginning 0.03 0.10 0.31 0.13 0.13 0.28 0.66 0.86 1.17 1.50 1.77 1.70 1.93 2.1h 2.36 2.96 1.99 2.13 2.30 2.'47 2.63 0.53 0,6 0.y6 0. Initial Equity Investment - - - 0.55 - - - - - - - - - -0 Long-Tern Loan - 0 1 L34--L-6 0-39--------- - - - Sub-Total 0.03 0.10 05 2.22 1.22 0.67 0.66 0.86 1.17 1.50 1.77 1.70 1.93 2.11 2.36 26 1.9 2.13 2.30 2 47 2.63 0 0 5 a.6 0 Net Profit 0.11 0.19 0.21 0.18 0.13 0.13 0.07 0.15 0.24 0.25 0.14 0.15 0.15 0.16 0.16 0.17 0.18 0.18 0.19 0.20 0.20 0.21 0.22 0.23 0.24 Non-Cash Charges 0.03 0.03 0.03 0.03 0.11 0.28 0.31 0.30 0.31 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0 Sub-Total 0.14 0.22 0.24 0.21 0.2L 0.41 0.38 0.45 0.99 0.55 0.h 0.49 0.45 0.466 0.46 o -41 0.48 o 0.49 0.50 0.9 0.51 o.52 0.53 0.54 Total Cash 0.17 0.32 0 2 1.93 1.08 1.06 L l 20 2.21 21 M 2.60 2.82 9 2.61 9 2 ± 0 1 2 L Increase in Payables & Others 0.04 - - - 0.04 0.01 0.02 0.01 0.02 - - - - - - - - - - - - - - - Total Funds Provided 0.21 0.32 0 2.43 1.97 1.09 1.06 1.32 1 2.05 2.21 2.15 2.38 2.60 2.82 30 2 432 22 97 1.04 1.17 129 1 Application: Project Expenses Land - - - - - - - - - - - - - - - - - - - - - - - - - Building, Fixtures &Equipment - - 92 2.21 O O7 0 29 - 0.21 - - - - 0.81 - - - - 2.23 - - - - Sub-Total U-9 2.21 097 0.29 - - - 0.21 - - - - 0.31 - - - - 2.23 - - - - Pre-Operational Expenses & Deferred Charges - - 0.01 0.08 0.21 0.12 - - - - - - - - - - - - - - - - - - - Total Project Expenses - - 0.60 2.29 1.18 0.1 - - - 0.21 - - - - 0.81 - - - - 2.23 - - - - Long-Term Repayment 0.01 0.01 0.01 0.01 0.02 - 0.07 0.08 0.09 0.09 0.10 0.11 0.12 0.12 0.13 0.14 0.16 0.17 0.18 0.19 0.21 0.23 0.24 0.26 0.28 Dividends 0.04 - - - 0.10 0.05 0.12 0.19 0.20 0.11 0.12 0.12 0.13 0.13 0.14 0.14 0.14 0.t 0.16 0.16 0.17 0.18 0.18 Increase in Current Assets 0.06 - - - 0.09 0.02 0.03 0.02 0.03 - - - - - - - - - - - - - - - - Total Application 0.11 0.01 0.61 23 .2 0 0.20 0.15 0.24 0.28 0.51 0.22 0.24 C.24 0.26 1.08 0.30 0.31 02 (4 2.60 0.39 0.1 0.46 0.6 Cash at End 0.10 0.31 O.1 0.13 0.28 0.66 0.86 1.17 1.50 1.77 1.70 1,93 2.14 2.36 2.96 1.95 2.13 2.30 2.47 2.63 (5 60 0.76 o.85 o.93 Debt Service Coverage: Generated :ncome plus Interest 0.53 0.62 0.69 0.73 0.73 0.78 0).73 0.78 0.78 0.73 G.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.73 0.78 71aturities plus Interest 0.19 0.32 0.33 0.32 0.33 0.33 0.33 0.32 0.32 0.32 0.33 0.33 0.33 0.33 0.33 0.34 0.33 0.34 0.35 0.35 Debt Service Coverage 2.8 1.9 2.1 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2. 2.4 2.4 2.4 2.3 2.3 2.3 2.2 2.2 February 1972 NEPAL: KATHIANDU TOURISM PROJECT HOTEL DE L'ANNAPURNA DEPRECIATION SCHEDULE (in 000 US$) Professional Fees Existing New & Total New Total No. of Years Yearly Assets Investment Project Management Investment Assets of Depreciation Depreciation Land 79 - - - 79 - - Buildings 319 1,129 126 1,255 1,574 33 47.7 Mechanical, electrical engineering 54 1,900 70 1,970 2,024 15 134.9 Furnishing 72 400 55 455 527 10 52.7 Office Equipment 4 30 - 30 34 10 3.4 Special Hotel Equipment - 40 - h0 40 10 4.0 Carpetb, curtains, beddings 130 - 130 130 5 26.0 Ancillary hotel equipment - 50 - 50 50 5 10.0 Vehicles 8 22 - 22 30 5 6.0 TOTAL 536 3,701 251 3,952 4,488 284.7 Pre-Opening Expenses - 15 - 15 15 5 3 Interest during construction - 401 - 401 401 20 20 Sub-Total - 416 - 416 416 23 Operating Equipment - 115 - 1 115 TOTAL 536 4,232 251 b,483 5,019 February 1972 NEPAL: KATHMANDU TOURISM PROJECT SCHEDULE OF ACCOMMODATION OF THE YAK and TETI HOTEL. KATHMANDU Rate of Exchange: US$1.00 = Rupees 10.125 Total Area Siteworks Construction Equipment TOTAL COST Type of Accommodation (sq. ft.) NR?s.(000) NRs. (000) NRA.(OOO) eWq. (000) US$ (000) Access Road 278.4 278.4 27.5 Bedroom Area (120 guest rooms) 53,260 320.0 6,390.0 1,098.6 7,808.6 771.2 Public Space 3,000 17.2 349.3 106.3 472.8 46.7 General Service Space 10,540 61.8 1,227.1 237.9 1,526.8 150.8 Concession and Sub-Raftal Space 2,200 15.0 245.0 10.1 270.1 26.7 Food and Beverage Space 12,500 78.0 1,569.4 366.5 2,013.9 198.9 Miscellaneous Facilities 2,500 324.0 425.2 126.6 875.8 86.5 Sub-Total 84,000 816.0 10,484.4 1,946.0 13,246.4 1,308.3 (+417.1) (+625.8) (+1,042.9) Contingencies: Price Increase 107.4 1,722.6 256.3 2,036.3 206.1 Physical Increase 7h.8 1,202.3 336.3 1,611.4 159.1 Total Contingencies 182.2 2,926.9 590.6 3,697.7 365.2 Sub-Total 998.2 13,609.3 2,536.6 16,944.1 1,673.5 Improvement of Existing Facilities 617.1 625.8 1,042.9 103.0 Professional Services 690.3 68.2 Project Management 101.2 10.0 Pre-Opening Expenses 356.6 35.0 Land Acquisition 283.5 28.0 GRAND TOTAL 19,416.6 1,917.7 Februpry 1972 YAK AND YETI HOTEL SCHEDULE OF ACCOMMODATION Total Area Siteworks Construction Equipment Total Total (sq. ft.) NR5. (000) VHiS. (COO) 14Ro 00 U 0000 1. BEDROOM AREA 24 Single bedrooms (12' x 12' not, bathroom, closet, 6' x 12' balcony) 8,400 921.4 84 Double bedrooms (12' x 15' net, bathroom, closet, 6' x 12' balcony) 32,760 3,592.3 6 Suites (2 rooms 12' x 15' net, 2 bathrooms, closets, balconies) 4,680 513.3 5 Linen & Service Room 1,500 164.o 2 Stairways 560 61.8 Elevators 210 620.7 Corridors 5,150 516.5 Sub-Total 53,260 320.0 6,390.0 1,098.6 7,808.6 771.2 2. PUBLIC SPACE 1 Main Lobby & Registration 1,600 177.2 1 Men's Toilet 150 25.3 1 Women's Toilet 150 25.3 1 Women's Rest Room 100 11.1 Circulation 1,000 110.4 Sub-Total 3,000 17.2 349.3 106.3 472.8 46.7 3. GENERAL SERVICE SPACE 1 Manager's Office 160 22.3 1 Accounting Office 2k0 28.3 1 Telephone Operator (3 outside lines) and Sound Control 60 68.8 1 Housekeeper and Linen Room 400 40.5 1 Men Erployees' Toilets and Lockers 360 40.5 1 Women's Employees' Toilets and Lockers 120 15.2 1 Laundry (only for the Hotel) 1,500 187.3 Mechanical Services and Machines Areas 3,200 441.4 1 General Store 1,500 91.2 1 Repair Workd1op 600 48.6 Circulatiom 2,400 243.0 Sub-Total 10,540 61.8 1,227.1 237.9 1,526.8 150.8 Total Area Siteworks Construction Equipment Total Total (sq. ft.) NAs.(000) was. (000) NRs.(OOO) NRs. 000 U 4. CONCESSION & SUB-RENTAL 1 Barber Shop 220 24.3 1 Beauty Parlor 360 40.5 Other Rented Store (incl. Storage Area) 1,400 155.9 Circulation 220 24.3 Sub-Total 2,200 15.0 245.0 10.1 270.1 26.7 5. FOOD AND BEVERAGE SPACE 1 Coffee Shop (160 seats) 3,500 439.4 1 Outside Bar 500 50.6 1 Main Kitchen 3,200 456.7 1 Kitchen Storage & Gold Chamber 2,800 394.9 Circulation 2,500 227.8 Sub-Total 12,500 78.0 1,569.4 366. 2,013.9 198.9 6. miscE[,LANEoUS FACILITIES 1 Swiming Pool 2,500 425.2 2 Vehicles (trucks) 126.6 Landscaping, Parking Area, Tennis Court, Fencing, Roads, Sidewalks, etc. 324.0 Sub-Total 2,500 324.0 425.2 126.6 875.8 86.5 7. ACCESS BOAD Road Construction 278.4 278.4 27.5 278.4 278.4 27.5 NEPAL: KATHMANDU TOURISM PROJECT YAK AND YETI.HOTEL Estimated Schedule of Expenditures (In US Dollars) Professional Project Pre-Opening Quarters Land/Road Siteworks Construction Equipment Services Management Expenses Total 1 10,800 9,800 65,600 15,800 1,000 103,000 2 10,800 9,800 65,600 15,800 1,000 103,000 3 10,800 14,700 131,200 32,300 7,800 1,000 197,800 4 10,800 19,600 196,800 64,600 7,800 1,000 300,600 5 7,000 14,700 262,400 64,6o0 7,800 1,000 357,500 6 3,900 9,800 262,400 32,300 7,800 1,000 317,200 7 3,900 4,900 131,200 32,300 7,800 1,000 17,500 198,600 8 3,857 4,900 65,600 32,300 7,804 1,000 17,500 132,961 9 32,300 1,000 33,300 10 31,886 1,000 32,886 11 10,124 130,69 140,818 12 (61,857) (98,324) (1,311,494) (322,586) (78,404) (10,000) (35,000) (1,917,665) February 1972 NEPAL: KATHMANDU TOURISM PROJECT YAK AND YSTI HOTEL Estimated Schedule of Disbursements (In US Dollars) Professional Pre-Opening Quarters Land/Road Siteworks Construction Equipment Services Expenses Total 1 - 2 3,154 6,860 45,920 7,900 63,834 3 3,154 6,860 45,920 7,900 63,834 4 3,154 10,290 91,840 25,194 3,900 134,378 5 3,154 13,720 137,760 50,388 3,900 208,922 6 2,044 10,290 183,680 50,388 3,900 250,302 7 1,139 6,860 183,680 25,194 3,900 220,773 8 1,139 3,430 91,840 25,194 3,900 14,000 139,503 9 1,124 3,430 45,920 25,194 3,902 14,000 93,570 10 25,194 25,194 11 24,871 24,871 12 7,087 91,486 98,573 (18,062) (68,827) (918,046) (251,617) (39,202) (28,000) (1,323,754) February 1972 NEPAL: KATHMANDU TOURIS1M PROJECT YAK AND YETI HOTEL INTERk6T AND 0019[ITMENT CHAMGE (In US Dollars) Interest on Total Interest Accumulated Interest & Interest & Accumulated Accumulated Undisbursed during Construction Commitment Charge Comitment Charge Commitment Quarter Expenditures Disbursenants Disbursements Balance Per Quarter Accumulated Accumulated Per Quarter Accummulated 1 103,000 103,000 - - 1,323,756 - - 827 827 16 16 863 2 103,000 206,000 63,836 63,836 1,259,920 1,197 1,197 787 1,616 53 69 2,880 3 197,800 603,800 63,836 127,668 1,196,086 2,396 3,591 748 2,362 112 181 6,136 6 300,600 706,600 136,378 262,066 1,061,708 6,913 8,506 666 3,026 216 397 11,927 5 357,500 1,061,900 208,922 470,968 852,786 8,831 17,335 533 3,559 392 789 21,683 6 317,200 1,379,100 250,302 721,270 602,686 13,526 30,859 377 3,936 652 1,661 36,236 ? 198,600 1,577,700 220,773 962,063 381,711 17,663 68,522 239 6,175 988 2,629 55,126 8 132,961 1,710,661 139,503 1,081,566 262,208 20,279 68,801 151 6,326 1,371 3,800 76,927 9 33,300 1,763,961 93,570 1,175,116 168,638 22,033 90,836 93 6,619 1,786 5,586 100,839 10 32,886 1,776,867 25,196 1,200,310 123,6b 22,506 113,360 77 6,696 2,209 7,795 125,631 11 1h,818 1,917,665 26,871 1,225,181 98,573 22,972 136,312 62 6,558 2,661 1o,636 151,306 p 12 98,573 1,323,756 0 26,820 161,132 - 6,558 3,107 13,563 179,233 February 1972 HEPAL: KATHMANDU MOURTSM PROJECT YAK AND YETI HOTEL PROJECTED PROFIT AND IDSS STATEMENT Year Ending December 31 1974 2975 2976 1977 1978 1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Full Operational Year 1 2 3 - - 7 -7 9 10 11 12 13 7 7 T1 17 7 19 20 Revenue Rooms 0.18 0.36 0.43 0.47 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.52 0.52 0.51 Food 0.12 0.23 0.27 0.30 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 Beverage 0.05 0.11 0.13 C.13 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.i 0.14 0. 14 014 0. 1 0. O4 014 Total Revenue 0.35 0.70 O.3 0.90 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 097 0.97 Less Expenses: Payroll 0.10 0.19 0.20 0.20 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 Cost of Sales 0.06 0.12 0.15 C.16 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 0.17 Indirect Costs 0.12 0.23 0.26 0.28 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 Rent - 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Total Expenses 0.28 0.55 0.62 0.65 0,68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 Gross Profit 0.07 0.15 0.21 0.25 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 Less: Depreciation and Amortization of Deferred Expenses 0.05 0.09 0.11 0.10 0.11 0.10 0.11 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.09 Net Profit Before Interest 0.02 0.06 0.10 0.15 0.18 0.19 0.18 0.19 0.19 0.19 0.19 0.19 0.19 0.19 0.19 0.19 0.19 0.19 0.19 0.19 0.20 Less: Interest - 0.08 0.11 0.11 0.11 0.10 0.10 0.10 0.09 0.09 0.08 0.08 0.07 0.07 0.06 0.06 0.05 0.04 0.04 0.03 0.02 Net Profit (Loss) Before Income Tax 0.02 (0.02) '0.01) 0.04 0.07 0.09 0.08 0.09 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 0.14 0. 0.15 0.16 0.18 Less: Income Tax - - - - - - 0.04 0.01 0.05 0.05 0.05 0.05 0.05 0.05 0.06 0.06 0.06 0.07 0.07 0.07 0.08 Net Profit (Loss) After Tax 0.02 (0.02 (0.01 0.04 0.07 0.09 0.04 o. 0.05 0.05 0.06 0.06 0.07 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.10 Dividends - - - - 0.06 0.08 O. 0.04 0.04 0.04 0.05 0.05 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.07 0.08 Retained Earnings 0.02 - - 0.04 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.02 0.02 0.02 0.02 0.02 Cumulative Retained Earnings (Deficit) 0.02 - (0.01) 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.10 0.11 0.12 0.13 0.14 0.15 0.17 0.19 0.21 0.23 0.25 Return on Total Investment (%) -LI - 2.7 4.5 6.7 8.0 8.5 8.o 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8.9 1/ Net profit before interest and dividand February 1972 NEPAL: KAT11MANDU TOURISM PROJECT YAK AND YETI HOTEL PROJECTED FINANCIAL POSITION (i S Million7 Year Ending December 31 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 198 1986 1987 1988 1989 1990 1991 1992 1993 1994 Full Operational Year 1 2 3 T T Y 7 =B 9 10 11 12 13 T T7 t 17 _T8 19 20 Current Assets Cash 0.07 0.14 0.21 0.30 0.4h 0.53 0.51 0.58 0.64 0.69 0.75 0.99 0.64 0.67 0.70 0.72 0.26 0.28 0.29 0.30 0.29 Receivables 0.04 0.05 0.06 0.06 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 Inventories 0.03 0.04 0.04 0.05 0.06 0.06 0.06 0.06 o.o6 0.06 o.o6 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 Others 0.02 0.02 0.02 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 Total Current Assets 0.16 0.25 0.33 0.44 0.60 0.69 0.67 0.74 0.80 0.35 0.91 0.75 0.80 0.83 0.86 0.88 o4 0.44 0.45 0.46 0.45 Current Liabilities Long-Term Debt Maturities - 0.03 0.04 0.04 0.04 0.05 0.05 0.05 0.06 0.06 0.07 0.07 0.08 0.08 0.09 0.10 0.10 0.11 0.12 0.13 0.13 Payables 0.02 0.03 0.03 0.04 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 Provision for Dividend Payment - - - - 0.06 0.08 0.03 0.04 0.04 0.04 0.05 0.05 0.06 0.06 0.06 0.06 0.o6 0.06 0.06 0.07 0.08 others 0.03 0.04 0.05 0.05 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 Total Current Liabilities 0.05 0.10 0.12 0.13 0.21 0.24 0.19 0.20 0.21 0.21 0.23 0.23 0.25 0.25 c.26 0.27 0.27 0.28 0.29 0.31 0.32 Net Working.Capital 0.11 0.15 0.21 0.31 0.39 0.45 0.48 0.94 0.59 0.64 0.68 0.52 0.55 0.58 0.60 0.61 0.15 0.16 0.16 0.15 0.13 Fixed Assets (Net) Fixed Assets 1.59 1.84 1.85 1.76 1.67 1.58 1.49 1.44 1.35 1.26 1.17 1.08 1.19 1.10 1.01 0.92 0.83 1.22 1.13 1.04 0.9$ 0.86 Deferred Charges 0.06 0.18 0.21 0.19 0.18 0.16 0.15 0.13 0.12 0.11 0.10 0.09 0.08 0.07 0.06 0.o4 o 0.o3 0.02 0.01 - Total Fixed Assets 1.65 2.02 2.06 1.95 1.85 1.74 1.64 1.57 1.47 1.37 1.27 1.17 1.27 1.17 1.07 0.97 0.87 1.25 1.15 1.05 0.95 0.86 Total Net Assets 2.13 2.21 2.16 2.16 2.13 2.09 2.05 2.01 1.96 1.91 1.85 1.79 1.72 1.65 1.57 1.48 1.40 1.31 1.21 1.10 0.99 Long-Term Liabilities NIDD Loan 1.00 1.37 1.50 1.47 1.43 1.39 1.35 1.30 1.25 1.20 1.14 1.08 1.01 0.94 0.86 0.78 0.69 0.59 0.49 0.38 0.26 0.13 (Less: Debt Maturities) - - 0.03 0.04 0.04 0.04 0.05 0.05 0.05 0.06 0.06 0.07 0.07 0.08 0.08 0.09 0.10 0.10 0.11 0.12 0.13 0.13 Total Long-Term Liabilities 1.00 1.37 1.47 1.43 1.39 1.35 1.30 1.25 1.20 1.14 1.08 1.01 0.94 0.86 0.78 0.69 0.59 0.49 0.38 0.26 0.13 - Eqouity 0.65 0.76 0.74 0.73 0.77 0.78 0.79 0.80 0.81 0.82 0.83 0.84 0.85 0.86 0.87 0.88 0.89 0.91 0.93 0.95 7 0.99 Represented by: Share Capital 0.65 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.7L Retained Earnings(Loss)4/ - 0.02 - (0.01) 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.10 0.11 0.12 0.13 0.14 0.15 0.17 0.19 0.21 0.23 0.25 Total Equity 0.65 0.76 0.74 0.73 0.77 0.73 0.79 0.80 0.81 0.82 0.83 0.84 0.85 0.86 0.87 0.88 0.89 0.91 0.93 0.95 0.97 o.9 Current Ratio" - 3.2:1 2.5:1 2.8:1 3.4:1 2.9:1 2.9:1 3.5:1 3.7:1 3.3:1 4.0:1 4.0:1 3.3:1 3.2:1 3.3:1 3.3:1 3.3:1 1.6:1 1.6:1 1.6:1 1.5:1 1.4:1 Long-Term Debt/Equity Ratio - 64:36 67:33 66:34 64:36 63:37 62:38 61:39 60:40 58:42 57:43 55:45 53:47 50:50 47:53 44:56 40:60 35:65 29:71 21:79 12:83 - 1/ Net of dividend provision T/ Current nsturities of LT debt as a current liability February 1972 NEPAL: KATHMANDU TOURISM PROJECT YAK AND YETI HOTEL PROJECTED CASH FLOW Year Ending December 31 1972 1973 1974 1975 1976 1977 1978 1979 1930 1981 1982 1983 1984 1985 1936 1987 1988 1989 1990 1991 1992 1993 199b Full Operational Year 1 2 3 7 7 d 10 11 12 13 7 17 17 1 19 20 Source: Cash at Beginning - - - 0.07 0.14 0.21 0.30 0.4 0.53 0.51 0.58 0.64 0.69 0.75 0.59 0.64 0.67 0.70 0.72 0.26 0.28 0.29 C.30 Initial Equity Investment- 0.27 0.33 0.04 - - - - - - - - - - - - - - - - - - Long-Term Loan NIDC 0.14 0.86 0.37 0.13 - -- - - - - - - - - - Sub-Total 0.41 1.19 0.41 0.20 0.14 0.21 0.30 0.44 0.53 25 0.58 0.64 0.69 0.75 0.59 0.64 0.67 0.70 0.72 0.26 0.28 0.29 0.30 Net Profit ,oss) - - 0.02 (0.02)(0.01) 0.04 0.07 0.09 0.04 0.05 0.05 0.05 0.06 0.06 0.07 0.07 0.07 0.07 0.03 0.08 0.08 0.09 0.10 Non-Cash Charges - - 0.05 0.09 0.11 0.10 0.11 0.10 0.11 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.09 Sub-Total - - 0.07 0.07 0.10 0.14 0.18 0.19 0.15 0.15 0.15 0.15 0.16 0.16 0.17 0.17 0.17 0.17 0.13 0.18 0.18 0.19 0.19 Total Cash - - 0.48 0.27 0.24 0.35 0.48 0.63 0.68 0.66 0.73 0.79 0.85 0.91 0.76 0.81 0.84 0.87 0.90 0.44 0.46 0.48 0.49 Increase in Payables & Others - - 0.05 0.02 0.01 0.01 0.02 - - - - - -- - _ -- - - - Total Funds Provided - - 0.53 0.29 0.25 0.36 0.50 0.63 0.68 0.66 0.73 0.79 0.85 0.91 0.76 0.31 0.34 0.37 0.90 0.44 0.46 0.48 0.49 Application: Project Expenses Land 0.03 - - - - - - - - - - - - - - - - - - - - - - Building, Fixtures & Equipment 0.37 1.14 0.25 0.10 - - - - 0.04 - - - - 0.20 - - - - 0.48 - - - - Sub-Total 0.4D 1.14 0.25 0.10 - - - - 0.04 - - - 0 0.20 - - 0.48 - - - Pre-)perational Expenses & Deferred Charges 0.01 0.05 0.12 0.03 - - - - -- - . . - - - - - - - - - Total Project Expenses 0.41 1.19 0.37 0.13 - - - - 0.04 - - 0.20 - - - 0.4 - - - Long-Term Repayment - - - - 0.03 0.04 0.04 0.04 0.05 0.05 05 o5 0.06 0.06 0.07 0.07 0.08 0.08 0.09 0.10 0.10 0.11 0.12 0.13 Dividends - - - - - - - 0.06 0.08 0.03 0.04 0.04 0.04 0.05 0.05 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.07 Increase in Current Assets - 0.09 0.02 0.01 0.02 0.02 - - - - - - - - - - - - - - , - Total Application - - 0.46 0.15 0.04 0.06 0.06 0.10 0.17 0.08 0.09 0.10 0.10 0.32 0.12 0.14 0.14 0.15 0.64 0.16 0.17 0.18 0.20 Cash at End - - 0.07 0.14 0.21 0.30 0.44 O5 0.51 0.58 0.64 0.69 7 0.59 0.64 0.67 0.70 0.72 0.26 0.28 0.29 0.30 0.29 Debt Service Coverage: Generated 7ncome plus Interest 0.15 0.21 0.25 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 Maturities plus Interest 0.11 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.16 0.15 0.15 0.16 0.16 0.15 Debt Service Coverage 1.4 1.4 1.7 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.8 1.9 1.9 1.8 1.8 1.9 1/ Including initial wrking capital FebruEry 1972 NEPAL: KATI]MINDIU TOURISM PROJECT YAK AND YETI HOTEL DEPRECIATION SCHEDULE 7M 000 us$) Professional Fees Existing New & New Total No. of Years Yearly Assets Investment Project Management Investment Assets of Depreciation Depreciation Land 53 28 - 28 81 - - Buildings, landscaping access road 20 1,109 62 1,171 1,191 33 36.0 Mechanical & electrical equipment 5 41 20 439 440 19 29.3 Furnishing 10 115 5 120 130 10 13.0 Office equipment - 12 - 12 12 10 1.2 Specialized hotel equipment 2 8 - 8 10 10 1.0 Carpets, curtains, bedding 24 1 29 29 9 5.0 Ancillary hotel equipment 6 - 6 6 5 1.2 Vehicles - 13 - 13 13 5 2.6 Sub-Total 90 1,730 88 1,813 1,908 89.3 Pre-Opening expenses - 35 - 39 35 Interest during construction 179 - 179 179 Sub-Total - 214 - 214 214 Operating equipment 10 65 - 65 75 TOTAL 100 2,009 88 2,097 2,197 February 1972 -3 Table 22 NEPAL IMPORT DUTIESSUCHARGES, SALES TAXES APPLICABLE TO HOTEL OPERATIONS IN NEPAL Import Sales Duty Surcharge Tax Hotel equipment: from overseas 50% - 9% from India 21% - 9% special rate a/i - - New Vehicles Bus, Truck, Lorry, with body 33% - 9% Pick-up-van $3% - 9% Mini-Bus, Van, Jeep, Station Waggon 75% - 9% Car below 1300 cc 90% - 9% 1300 - 2000 cc 111% - 9% 2000 - 2900 cc 125% - 9% above 2900 cc 160% - 9% Beverages & Food Stuff Spirits, Whiskey, Gin, Brandy, etc. Rs/gallon 330 + 70% 9% Beer Rs/gallon 15 + 70% 9% or 70% + 701V 9% Squash, Juice etc. Overseas 20% + 12% 9% Squash, Juice etc. India 15% 12% 9% Canned food: meat 38% - 9% : Soup, vegetable 25% - 9% : Other 13% - 9% Cigarettes, top quality, per 1000 150% - 9% or Rs 16.50b/ - 9% Hotel Sales Tax on all items charged on guests bill - - 5% a/ Concessionary rate applicable only after prior approval by the Government, the Customs Depprtment, and the Tourism Department. b/ whichever is higher. 7/ 9% sales tax on C.I.F. value + duty + 200% anticipated profit. c/ 9% sales tax on C.I.F. value + duty. February 1972 CHART 1 NEPAL TOURISM PROJECT SCHEDULES OF IMPLEMENTATION, EXPENDITURES, AND DISBURSEMENTS Years I1 Ill_IV Quarters 01 Q2 03 04 05 06 07 08 09 010 011 012 013 014 HOTEL DE L'ANNAPURNA _DEFECT LIABILITY PERIOD Siteworks -1I1aliuiuyni DEFECT LIABILITY PERIOD Construction ININEMEN 111NERAIIII DEFECT LIABILITY PERIOD Equipment -58 m511-111- Pre-opening Expenses YAK & YETI HOTEL DEFECT LIABILITY PERIOD Siteworks Cscn-DEFECT LIABILITY PERIOD Construction mnmmm amummm esessmgssases DEFECT LIABILITY PERIOD Equipment ifluumu 11BWW 1I11 lllUlul Pre-opening Expenses Credit Agreement Closing Signing Date Date Expenditures 1,746,300 3,292,700 961,000 (in U.S. Dollars) Rate 29.1% 54.9% 16.0% Disbursements 644,500 2,479,600 872,300 203,600 (In U.S. Dollars) Rate 15.3% 59.1% 20.8% 48% World Bank-6293(R) MAP 1 NEPAL POTENTIAL FOR TOURISM -- --- - - - SA - £ r T . 6 E T * ®* - 0.I ... ,..*- -- Surkhet _ Q ANNAPURNAA G QALQ epala -- 1,9 -a or ®ýSEE MAPO 2 -~ FOR DETAIL Kathmnd - o Ie Bar -L A I - I - Dhankujta ..r-- - - - - - I.I.-U ru, CYEYLON MARCH 1971 IBRD-3382 МАР 2 NЕPAL ,,nгы,� TOURIST S1TES OF ТНЕ ,�ь°� `'9�' _ �Г,�'..� ,� i -' _ ..�. ,... -�. _ � �' �, ,- � � �� KATHMANDU VALLEY '��' ~`� ��� , ' �OiiнCE KьiTM1A.111�1i .ЛLLtY FLFN � ; � � � � ��,г, :,>> s' �I ;OI--- II - о� ; �1г--, � �"°'s R��уГг� i С� � � . ///"•```��� �-vоап теа. r.аГпп.апд� Ф � � -. S/ ' 1 ' � ` ���� Н�ъгопс Dп1г�[1 �,., � , i 1� - i - -' - О? 1 МDпип.гпf I5Г Cia55 � I �` -� \ Q МопитепТ 2пд. cio5б I 1 � � � Моп�тРгд 3ra cross J � _ I � I � i � � Мппитеnf 4Гп c�ass � - - , ' � / Ф i - в,,.:�.;Г. I � ,' . 1 Pacraat�on site - �� � � Ф .�ew s�ie % , �i г'- � � � � � _■��-' - Q MJUn10in рЕдИ � � Ф _' � J� •� . i � G У_ ,,. •., о , ,, - , � ��'�'n _ --. �.У Г.�� . % раэ �� � � . , �,� ,.�:, ` _-_� � о� ' ■ 3 ' `- 1 �, :.��.-,,_ _ _-- ! ■ 3' � � � 4 f '% �� � � ' • Ф _ / � _ т �"� • ■ь;�;�ы.� � � _ Ф _ - _` . _ - i � �g � _ г ' �/ - 'I � - -- - ! �.. -нr �,.• � Г,.i1,11 _ '- � '- __ �Тн1.1.;1д.,�i У., '`' Г_ / f тГ.л:.У._:� - - . , - _ -- _. 1� - ' -�f - � s0: ' _� � - : -г •,� � --.• �. . - ---- � 1 ��� о'� .�.�,:� „Г ►! ..i „�'S ,- „ ��� •' Г � зь __�_�,��,Фс� д: j.II �� •`тГ...,., �� ■♦ �� !- � �Т- � 1 33 -:b4i -ь: , � �,^ ,-�^� _ �.Еп.;�.а�.;6 ,,\ l � р - �� •.._� � у ��"г�� S � х- i �_ ь;� з_ОФ ^'н�._ �- � � ` -- - -- _ i Ох-г �. �, �,�' М I- � �`i � f i изьs \ r-��,.- ,I и �i . •"• f J� Ф � � ❑ � - - --. /� •х-з G �,,гз-э - �;-'1i �,�1.Г„ У,,,: 114-, �� i � Z,� .� 1� � Г., п.•.' � Он,�: � ,.�п, � - _ I - _ г� rV , 1 р � U �p�n ■ ♦ ♦ О�'' �--'-'' х-ц х-5 х-ь ��и �� т � 1 ' %` ,- - - �z� _ � � . � -м ., �i ' - ' • х-� масs+ � �_• г.�[�.��.:.' � - i ё 6 Z ��_� ��' 1 4 - �;-,I � �_� .,�,.М: Г�F•. 25Q� ,- � � 1 Ф za= I ___ _� _-i-` ;. / / � � � • -ргг � 1 ' �. i� i��73 i�Г' _ �_ _, � � , l ( `• � MARCH 19�1 18RU-33б3 NEPAL Ke to Map No. IBRDt-3383 Tourist sites of the Kathmandu Valley Cultural. Map No. Name Setting Architecture Importance 1 CHANDESWARI C C C 2 BUDHANILKANTHA D - A 3 BAUDDHANATH A A A 4 GANESH B C B CHABAHIL B A B 6 PASUPATI B B A 7 GOKARNA MIAHADEV B B A 8 MAI B C C 9 MANICHUTAN OF BOUDHA B B B 10 KHADGA JOGINI A A B 11 CHANGU NARAYAN A B C 12 SURYA BINAYAK B D A 13 DARKSHIN VARAHI B C B 14 BAL KUMARI B C A 15 KOTESWAR MAHADEV B C B 16 MHA LAXMI B B A 17 .ARISIDDHI BHA9ANI C C A 18 SANTANESWAR MAHADEV B C C 19 BISANKU NARAYAN B C B 20 GODAVARI KUNDA A - B 21 FULCHOKI MAI NAV DRARA D D A 22 TIKA BHAIRAB B D B 23 VAJRAVARAHI A B A 24 DARSHIN KALI C - A 2 GORAKHANATH B - C 26 VAJRA JOGINI B C B 27 SIKHA NARAYAN B C A 28 MACHENDRANATH C C A 29 KARYA BINAYAK A D B 30 SHEKHALI DEVI C C B 31 JAL BINAYAR B C A 32 ADINATH B B C 33 BAGH BHAIRAV B A B 34 MACCHE NARAYAN A D C 35 MATATIRTHA A - A 36 MAHA LAXMI A B B 37 SWAYAMBHU A A A 38 BHAGWATI A B C 39 ICHANGU NARAYAN A C B 40 AJIMA DEVI B B B 41 CHITUBIBAR B C B X-1 BHAGWATI A B C X-2 KARANUAYA B B B X-3 CHANDESWARI A C A X-4 IkDRESIAR MAHADEV B A A X-5 BRAHMAYANI A B C X-6 KRISHNA TEMPLE B B C X-7 VIJAYA BHAGWATI B C C A = Outstanding B = Above average C = Average D = Little interest Source: Mission interpretation of description of sites in 'Kathmandu Valley Plan' November, 1971 一 g & 門ロ しり