Visitors to Mount Everest and other sites around Nepal—which is home to some of the richest biodiversity in the world—contribute significantly to the country’s economy. Tourism makes up around 20 percent of foreign exchange earnings. The sector employs about 425,000 people directly and provides employment to approximately 1 million people indirectly.
So when an avalanche and an earthquake struck the country in 2014 and 2015, the consequences were felt widely. Visitor numbers dropped, slashing tourism earnings and wiping out jobs for local people.
As the industry recovers, one family of business owners is strategizing to woo tourists back to Nepal’s most popular sites. For Dawa Steven Sherpa and his younger brother Tenzing David Sherpa, who own Himalayan Chain Resorts (HCR), top-quality hospitality infrastructure is the key to long-term success.
IFC’s investment of $1.7 million supports this strategy. The financing helps HCR as it develops and leases seven new mountain lodges and expands two of its three existing lodges along the Gokyo Lakes trekking trail and the Everest Base Camp trekking trail, two popular tourist destinations in Nepal. IFC offers a grace period that is not readily available in Nepal, especially for local entrepreneurs aiming to invest in tourism infrastructure in the remote regions of the country.
IFC’s investment is complemented by an equity investment from Nepal’s first private equity fund, Business Oxygen (BO2). BO2 is part of IFC’s Global SME Ventures initiative, created to support risk capital funds in fragile, frontier, and post-conflict markets. BO2 has been funded by IFC, the United Kingdom’s Department for International Development (DFID), and the Climate Investment Funds’ Pilot Program for Climate Resilience.
Ultimately, HCR’s project will help the Nepalese government reach its goal of increasing the number of international tourist arrivals in the country from about 753,000 in 2016 to 2 million by 2020. HCR’s project is expected to create approximately 120 direct jobs, as well as temporary jobs during construction, for the local Sherpa community in the Everest region. These employment opportunities will generate economic activity, benefiting Sherpa communities including indigenous women.
All Systems Go
According to the World Travel and Tourism Council, every dollar spent on travel and tourism generates over three dollars of economic output. Over 100 million workers are employed in this industry worldwide, and tourism revenues account for more currency flows to developing countries than all aid flows from foreign donors.
IFC invests in hotels and tourism because of this strong development impact, particularly in low-income countries. At the same time, we focus on mitigating environmental risks in the sector. IFC’s Environmental and Social Performance Standards, which define clients’ responsibilities for managing environmental and social risks, were critical to the HCR expansion. During the project, IFC helped the company create plans for biodiversity management, waste management, occupational health and safety, and emergency response and preparedness among other areas.
This approach aligned with the vision of HCR’s founders to create a lasting, positive impact. “IFC has been an incredible support in helping us achieve the dream of my family, to provide high standards of hospitality in one of the most extreme environments, the Mount Everest region,” says Dawa Steven Sherpa. “From helping us develop our administrative and accounting processes to introducing strategic opportunities and global best practices, IFC has been an invaluable partner on this journey.”
Join the conversation: #IFCimpact