The tourism slump has hit Pokhara badly. Last year it was Maoist activity on the Annapurna trek circuit, then it was the bandas, now it's the post- February First blockade which has affected especially Indian tourists to what used to be a favourite honeymoon destination.

A dozen hotels along Pokhara's once-bustling lakefront have closed shop in the past month. Others have been locked out by the banks. Chautari Hotel has been closed by down by Nabil Bank because it couldn't pay back Rs 10.3 million it borrowed. "We had no choice," said Nabil's Saroj Pyakurel.

Even the five-star Fulbari Resort has been getting frequent summons from its bankers. Electricity and telephone lines have already been cut, yet the hotel remains open. "The bankers would love to close down my hotel, too," says a defiant Piyush Amatya of Fulbari, "but they can't touch me, after all if there were three good seasons, I could pay back all my loans."

However, there is no sign of the tourists returning any time soon. Pokhara depends mostly on trekking traffic and there have been heavy group cancellations for the spring season. Dejected, the owners of Tragopan, Thorang-La, Saino, Pumori, Mandala and Begnas resort have all closed down.

Altogether, banks have invested Rs 20 billion in some 300 Pokhara hotel properties. Hoteliers say while they have been ruined, the banks are doing very well for themselves.

"Just because some hoteliers are willful defaulters, banks should not be closing down all hotels," says hotelier Sundar Kumar Shrestha, "The situation affects everyone and the day will come when the banks will also go bankrupt." As hotels close, downstream businesses like poultry farmers, vegetable vendors, dairy farmers and transporters are all hit. "Even store owners have lost faith in us," says Hari Gurung of the Hotel Association of Nepal.