Nepal’s tourism industry is one of the country’s strongest economic pillars from hotels and homestays to trekking agencies, tour companies, and adventure sports services. To operate legally, tourism-related businesses must follow the Tourism Act 2035, Tourism Regulation 2049, and local government requirements.

This guide explains the legal process for starting a hotel or tourism business in Nepal, required licenses, registration steps, and updated compliance rules.

Tourism Act in Nepal (Tourism Act 2035 Overview)

The Tourism Act, 2035 regulates tourism businesses across Nepal, ensuring:

• Safe & standardized hotel operations

• Regulation of travel, trekking, & tour agencies

• Tourist safety & service quality

• Licensing of adventure & risk-based activities

• Monitoring of hotel categories (star rating)

• Protection of tourist rights

The Act empowers the Department of Tourism (DoT) to issue licenses, inspect hotels, enforce safety rules, and suspend businesses violating standards.

Types of Tourism Businesses Regulated Under Nepali Law

Under the Tourism Act & Tourism Regulation:

1. Hotels (Star & Non-Star)

2. Resorts & Guesthouses

3.  omestays (Community & Private)

4. Travel Agencies

5. Tour Operators

6. Trekking Agencies

7. Rafting/Adventure Companies

8. Paragliding, Zipline, Bungee

9. Tourist Transport Services

10. Restaurants serving foreign tourists

Each category has its own legal requirements, inspections, and renewal obligations.

How to Start a Hotel Business in Nepal (Step-by-Step)

Starting a hotel requires approvals from local government, tourism authority, and industry-related agencies.

1. Choose Business Type

Register your business as:

• Private Limited Company

• Partnership Firm

• Proprietorship (small hotels)

Company registration is done at:

Office of Company Registrar (OCR)

2. Obtain PAN/VAT Registration

Register with the Inland Revenue Department (IRD) for:

• PAN (mandatory)

• VAT (if applicable)

3. Get Local Government Approval

Municipalities/Wards issue:

• Location approval

• Construction/operation permit

• Fire, sanitation & waste management approvals

4. Apply for Hotel License (Department of Tourism)

Required documents:

• Company registration certificate

• PAN/VAT certificate

• Land ownership/rental agreement

• Building map & completion certificate

• Staff details

• Service guidelines

• Fire & safety certificates

The Department inspects the site before granting approval.

5. Star Classification (Optional)

Hotels can apply for:

• 1-star to 5-star rating

• Resort category

• Boutique or special hotels

The Department evaluates:

• Rooms & facilities

• Hygiene standards

• Safety compliance

• Service quality

6. Renew License Annually

All hotel & tourism businesses must renew their license each fiscal year.

How to Start a Tourism Business in Nepal (Travel/Trekking/Adventure)

Depending on the service, you need:

1. Travel Agency License

2. Trekking Agency License

3. Tour Guide License

4. Adventure Tourism License

(Paragliding, rafting, mountain flights, bungee)

Key Requirements:

• Company registration

• PAN/VAT

• Bank guarantee (for trekking & travel agency in Nepal)

• Qualified staff/guides

• Insurance for staff & tourists

• Safety equipment inspection

Adventure businesses must meet strict technical safety standards.

Constitutional Policy of Tourism in Nepal

Under the Constitution of Nepal (2015):

• Tourism is recognized as a major sector for economic development

• Government must promote sustainable tourism

• Protection of natural, cultural, and heritage sites is mandatory

• Local governments have significant authority over tourism management

• Infrastructure development must support tourism growth

Compliance Requirements for Hotel & Tourism Businesses

Tourism businesses must maintain:

• Fire & safety standards

• Cleanliness and sanitation

• Updated price lists & service quality

• Tourist insurance (adventure tours)

• Trained staff and guides

• Environmental guidelines

• Reporting of foreign guests (for hotels)

Failure to comply may lead to penalties, suspension, or cancellation of license.

Tax Requirements for Tourism Businesses

• Hotel tax/VAT obligations
• Service charge distribution rules
• Tourist tax (if applicable)
• Income tax based on accounting standards
• Foreign tourist reporting for audit compliance.

Conclusion

Starting a hotel or tourism business in Nepal requires compliance with the Tourism Act 2035, Tourism Regulations, local government rules, and safety standards. Whether you are opening a hotel, launching a travel agency, or offering adventure activities, following the legal process ensures smooth operation, credibility, and long-term success in Nepal’s rapidly growing tourism sector.