Nepal’s hotel and tourism sector plays a vital role in national economic growth, covering hotels, resorts, homestays, trekking agencies, travel companies, and adventure tourism operators. However, operating any tourism-related business without proper legal approval can result in penalties, suspension, or closure.
At Onesphere Law Associates, we provide end-to-end legal support for hotel and tourism business registration in Nepal, ensuring full compliance with the Tourism Act, 2035, Tourism Regulation, 2049, and applicable local government laws.
This guide explains the legal framework, licensing procedures, registration steps, and ongoing compliance obligations for tourism businesses in Nepal.
Tourism Act, 2035: Legal Foundation of Tourism Business in Nepal
The Tourism Act, 2035 is the principal law governing tourism activities in Nepal. It regulates tourism enterprises to ensure safety, service quality, and sustainable development.
Key objectives of the Tourism Act include:
- Regulation of hotel and hospitality standards
- Licensing of travel, trekking, and tour operators
- Safety control for adventure and high-risk tourism activities
- Classification of hotels (star rating system)
- Protection of tourist rights and interests
The Department of Tourism (DoT) is empowered to issue licenses, conduct inspections, enforce compliance, and take legal action against non-compliant businesses.
Types of Tourism Businesses Regulated in Nepal
Under Nepali tourism laws, the following businesses require licensing and approval:
- Star and Non-Star Hotels
- Resorts and Guesthouses
- Community and Private Homestays
- Travel Agencies
- Tour Operators
- Trekking Agencies
- Adventure Tourism Companies (rafting, paragliding, bungee, zipline)
- Tourist Transportation Services
- Restaurants catering to foreign tourists
Each category has separate eligibility criteria, documentation requirements, and renewal procedures.
Legal Process to Start a Hotel Business in Nepal
1. Business Registration
Hotels may be registered as:
- Private Limited Company
- Partnership Firm
- Sole Proprietorship (small-scale hotels)
Registration is completed at the Office of the Company Registrar (OCR) or local authority, depending on the business structure.
2. PAN and VAT Registration
Registration with the Inland Revenue Department (IRD) is mandatory for:
- Permanent Account Number (PAN)
- Value Added Tax (VAT), where applicable
3. Local Government Approval
Municipal approval is required for:
- Business location clearance
- Building and construction permits
- Fire safety, sanitation, and waste management clearance
4. Hotel License from Department of Tourism
A hotel license application must include:
- Company registration certificate
- PAN/VAT certificate
- Land ownership or lease agreement
- Approved building map and completion certificate
- Fire and safety compliance reports
- Staff details and service standards
The Department of Tourism conducts a physical inspection before issuing the license.
5. Star Classification (Optional)
Hotels may apply for:
- 1-Star to 5-Star classification
- Resort or boutique hotel category
Classification depends on infrastructure, hygiene, service quality, and safety compliance.
6. Annual License Renewal
Hotel licenses must be renewed every fiscal year to remain valid.
Legal Requirements to Start a Tourism Business in Nepal
Depending on the nature of services, tourism operators require:
- Travel Agency License
- Trekking Agency License
- Tour Operator License
- Adventure Tourism License
Additional requirements include:
- Bank guarantee (mandatory for travel and trekking agencies)
- Qualified and licensed guides
- Insurance coverage for employees and tourists
- Safety equipment certification
Adventure tourism businesses are subject to strict technical and safety inspections.
Constitutional Policy on Tourism in Nepal
The Constitution of Nepal (2015) recognizes tourism as a priority economic sector and mandates:
- Promotion of sustainable tourism development
- Protection of cultural, environmental, and heritage sites
- Decentralized authority to local governments for tourism management
- Infrastructure development to support tourism growth
Compliance Obligations for Hotel and Tourism Businesses
Tourism businesses must maintain:
- Fire and safety standards
- Cleanliness and hygiene requirements
- Transparent pricing and service quality
- Tourist and staff insurance (for adventure activities)
- Environmental compliance
- Reporting of foreign guests
Non-compliance may result in fines, license suspension, or cancellation.
Tax and Regulatory Obligations for Hotel and Tourism Business
Tourism businesses must comply with:
- VAT and hotel tax requirements
- Income tax filing
- Service charge distribution rules
- Tourist tax (if applicable)
- Audit and foreign guest reporting obligations
Conclusion
Operating a hotel and tourism business in Nepal requires strict compliance with the Tourism Act, 2035, Tourism Regulations, and local government rules. Whether you are establishing a hotel and tourism business, travel agency, trekking company, or adventure tourism service, proper legal structuring ensures credibility, safety, and long-term success.
Onesphere Law Associates provides comprehensive legal services for hotel and tourism business registration, licensing, compliance, and dispute resolution in Nepal.